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2023 (12) TMI 199 - HC - CustomsRecovery of customs duty / dues - Perior over secured creditors - Validity of order of attachment - Seeking removal of entry of attachment made by the 4th respondent on the property of the petitioner company - overriding effect of SARFAESI Act than any other Act including Customs Act under Section 26E under Chapter IV-A - HELD THAT:- In the present case, if the plea of the respondents ought to be considered that deposit of title deeds is not registered, then at the same breath, it ought to be considered that the attachment is also not registered. Then the bank and the Customs Department are standing on the same footing. Moreover, there is no provisions in the Customs Act granting 1st charge to its dues under its Act. In such circumstances, when both the parties are standing on the same footing and when there are no provisions of 1st charge to Customs Department then it ought to be seen which proceedings is first. A similar issue was considered by the High Court of Andhra Pradesh and Telangana in the case of ICICI Bank Limited Vs. Tax Recovery Officer [2019 (3) TMI 701 - TELANGANA AND ANDHRA PRADESH HIGH COURT]. The challenge in the said judgment is an attachment order 14.03.2018, issued by the Tax Recovery Officer under Rule 48 of second schedule. After considering section 281 and rule 48, the Court has elaborately dealt with the issue and has held that there is no provision in the Income Tax Act by which a first charge is created automatically on the properties of the assesses. And also held it is now well settled that wherever the statute does not create a first charge over the property, the crown's debt does not take precedents over the claim of the secured creditor - In the present case also, there is no provisions in the Customs Act creating 1st charge on the property of the defaulter and the above judgment is applicable to the present case. Admittedly the bank had executed mortgage of deposit of title deeds on 31.07.1997, which is prior to the attachment of the Customs Department which was passed on 01.11.2004. Therefore, financial institution is having 1st charge as secured creditor than the crown debt. Hence, the impugned attachment cannot sustain the scrutiny of law. Hence, the impugned attachment is liable to be quashed. Petition allowed.
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