Case law

Andhra HC (Pre-Telangana) · 3 Sep 2004

Sri Vishnupriya Industries Ltd. (In… vs Superintendent Of Central Excise And Customs

Legal principle

A detention and sale of warehoused goods under Section 72(2) of the Customs Act without a proper demand under Section 72(1) and notice to the owner is non est and void ab initio, and where no sale has been effected before a winding-up order, the unsold goods vest in the Official Liquidator under Section 456(1) of the Companies Act, recovery of dues thereafter following the Section 142 procedure and Board circulars.

Court decision

The Court held that there was neither a proper demand under Section 72(1) nor notice to the owner under Section 72(2), so the detention orders dated 27-2-2002 and 19-12-2000 were non est in the eye of law and void ab initio, vitiating the seizures and subsequent sale steps. It further held that goods detained under Section 72(2) must be sold by following the Section 142 procedure and the CBEC Circulars (attachment under Rules 9 and 10 of the 1995 Rules), the department having taken a bond agreeing to recovery under Section 142(1). Since no sale was effected before the winding-up order of 1-12-2003, the goods stood vested in the Official Liquidator under Section 456(1) of the Companies Act; the application was allowed and the respondents were directed to hand over all 128 wooden cases to the Official Liquidator, who alone could deal with them, with the respondents left to prove their dues claim before him.

Facts

M/s. Sri Vishnupriya Industries Ltd. held a Customs Private Bonded Warehouse licence granted on 18-6-1998 under Section 9 of the Customs Act and warehoused imported machinery packed in 128 wooden cases in three EPCG consignments, executing bonds under Section 59(2). The company neither installed the machinery nor cleared it even after the extended warehousing period, leading to two show-cause notices and Orders-in-Original dated 15-9-2000 and 10-10-2000 confirming customs duty. On non-payment, the Superintendent passed detention orders on 19-12-2000 and 27-2-2002 under Section 72(2) (read with Section 142), seized the cases under two panchanamas on 14-3-2002, and conducted auctions on 30-10-2002 and 30-12-2002. After the company was ordered to be wound up on 1-12-2003, the Official Liquidator found the machinery still under the department's seizure and custody, and applied under Section 468 of the Companies Act for its handover.

Key provisions