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2015 (11) TMI 689 - MADRAS HIGH COURT

2015 (11) TMI 689 - MADRAS HIGH COURT - 2015 (325) E.L.T. 332 (Mad.) - Attachment of property - Garnishee order - Freezing of bank account - Auction of goods without prior permission - Held that:- cargo containing sheets cutting belonging to the second respondent was lying with the petitioner's CFS and thereupon, by conducting E-auction, the petitioner's Company sold the goods in question for a sum of ₹ 40,77,000/-. As per Section 150 of the Customs Act, the petitioner Company has to pay n .....

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fore, when the petitioner Company has sold away the goods belonging to the second respondent legally in E-auction only after issuing notices to both the respondents and thereby they have also realised a sum of ₹ 42,80,850/-, after adjusting all these amount as per Section 150 of the Customs Act, yet they have incurred additional expenses of ₹ 21,243/- and thus, they were ultimately left with no money from the sale proceeds of E-auction. Hence, since nothing has been left with the pet .....

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, finding no reply, the petitioner issued another notice dated 08.08.2013 under Section 48 of the Customs Act for disposal of the said goods and finally, since there was no response from the second respondent, the petitioner Company, with due intimation to the first respondent, sold the goods belonging to the second respondent for a sum of ₹ 40,77,000/- vide E-auction dated 28.11.2014, therefore, I do not find any irregularity in selling the goods as they admittedly issued notices to both .....

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arrears payable by the second respondent. In the second notice, the first respondent requested the third respondent Bank not to release the bank account of the petitioner Company without prior intimation to their office. 2. It is the claim of the petitioner Company that the petitioner Company, having specialization in Container Freight Services (CFS) for their customers, obtained necessary permissions for CFS facilities vide Public Notice 172/1997, dated 15.10.1997, from the office of the Commi .....

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ing Company S.A. had moved the goods to the petitioner's CFS. It is further stated that such movement of the goods have been intimated to the Superintendent of Customs, CMFC, Customs House, Chennai, vide letter dated 16.06.2013. 3. By narrating the above said facts, learned counsel for the petitioner submitted that since the cargo containing the goods of the second respondent was lying at the CFS facility of the petitioner Company from 17.06.2013, they initially had issued notice under Secti .....

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ces even after receiving several reminders from the petitioner Company. Such details had also been intimated to the Assistant Commissioner of Customs (Imports) by the petitioner Company vide letter dated 01.03.2014. Finally, since the cargo containing sheet cuttings un-cleared for more than a period of one year, as per the provisions of the Customs Act, 1962, the petitioner Company sold the same to M/s.New Golden Steels, for a sum of ₹ 40,77,000/- vide E-auction dated 28.11.2014. Therefore .....

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on the Sale 2,03,850 40,77,000 E-Auction Expenses 1,50,000 Customs Duty Paid 9,27,303 Storage and handling charges inclusive of overdue charges 30,20,940 Balance due from second respondent - 21,243 4. When the matter stood as above, it is the contention of the learned counsel for the petitioner that as illustrated in the above table column, it is clear that only an debit balance of ₹ 21,243/- remains with the petitioner Company and in other words, there is no money due and payable by the p .....

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arned counsel for the petitioner submitted that as a matter of right, even if the first respondent is entitled to recover the proceeds, namely, ₹ 40,77,000/- received from the auction, after adjusting the said amount, they ought to have debited balance amount of ₹ 35,27,000/- to the petitioner's bank account. In any event, since first respondent did not provide an opportunity of personal hearing, they ought not to have directed the third respondent bank not to release their bank .....

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7; 40,77,000/- vide E-auction, dated 28.11.2014, therefore, since second respondent failed to pay the arrears of sales tax to the tune of ₹ 1,25,34,480/-, the first respondent is entitled to recover all the proceeds realised by the petitioner Company by applying Section 42(2) of the TNVAT Act. Therefore, as the first respondent has got the right of recovering such arrears in the light of Section 42(2) of the TNVAT Act, the petitioner cannot challenge the impugned proceedings of the first r .....

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notices to the second respondent as stated above inviting them to clear the goods lying in the CFS facility, have admitted that the goods sold in E-auction belonging to the second respondent, therefore, the first respondent has rightly issued the impugned notices for recovery of dues payable by the second respondent towards sales tax arrears, hence, no interference is called for. 7. Heard both sides. 8. Admittedly, the cargo containing sheets cutting belonging to the second respondent was lying .....

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are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied- (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods, .....

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, to the owner of the goods within a period of six months from the date of sale of such goods or such further period as the Commissioner of Customs may allow, such balance of sale proceeds shall be paid to the Central Government.] From the above said Section, it is clear that in the event of a public auction under the Act, the proceeds of the sale shall be applied in the above said order. Accordingly, in the present case, the petitioner Company had incurred ₹ 1,50,000/- towards E-auction, .....

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per Section 150 of the Customs Act, yet they have incurred additional expenses of ₹ 21,243/- and thus, they were ultimately left with no money from the sale proceeds of E-auction. Hence, since nothing has been left with the petitioner Company as balance money from the proceeds of the auction sale, the respondent is not legally entitled to attach the amount deposited in the third respondent Bank. 9. Though the learned Additional Government Pleader (Tax) submitted that as per Section 45(1)( .....

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