Ruchi Soya Industries Ltd. Vs Union of India (Madras High Court)
Conclusion: Once a resolution plan was duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. The case was therefore remitted back to the respondent to await clarification to be obtained by assessee from the NCLT as to whether the Corporate Resolution Plan filed by the Corporate Applicant included the “customs duty” to be paid by assessee on the import under the subject bill of entry.
Held: Assessee-company had filed the above Bill of Entry in advance to clear the consignment of crude palm oil of edible grade in bulk. In the Bill of Entry, it had proposed to pay Basic Customs Duty (BCD) at 7.5% as per Serial No.55 to Notification No. 12/2012-Customs dated 16.3 .2012 as it stood on 15.09.2015. However, after the import and at the time when the said Bill of Entry was taken up for assessment, Serial No.55 to Notification No.12/2012-Customs dated 17.3.2012 was amended vide Notification No.46/2015-Customs dated 17.9.2015 which had increased the rate of Basic Customs Duty ( BCD) to 12.5% from 7.5%. The issue arose for consideration was that the amendment to Serial No. 55 to Notification No.12/2012-Customs dated 17.3.2012vide Notification No. 46/2015- Customs dated September 17, 2015 which increased the rate of duty from 7.5% to 12.5% could not be said to have come into force on the date of assessment on March 17, 2012 as per the Section 25 of the Customs Act, 1962 as it stood on the date. Also, assessee was under the provisions of the Insolvency and Bankruptcy Code, 2016 during the pendency of the present writ petition. National Company Law Tribunal, Mumbai had appointed an Interim Resolution Professional (RP) and that RP filed M.A.No. 1721/2019 under Section 30 (6) of the aforesaid Code for approval of the Corporate Resolution Plan submitted by a Consortium led by Patanjali Ayurvedic Ltd as Corporate Application as approved by the members of the Committee of Creditors (COC). Assessee contended that RP called upon the creditors of assessee to submit their claims and since the Customs Department did not come forward to participate in the said proceedings before the National Company Law Tribunal, Mumbai, it had lost all its rights as they stood extinguished. It was held that once a resolution plan was duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; The case was therefore remitted back the respondent to await clarification to be obtained by assessee from the NCLT as to whether the Corporate Resolution Plan filed by the Corporate Applicant included the “customs duty” to be paid by assessee on the import under the subject bill of entry. Assessee should therefore file an appropriate application before NCLT the National Company Law Board and get the issue clarified from NCLT that the indeed crown debts like the differential “ customs duty” payable to respondent under the subject bill of entry were treated as “operational debt” before it by the “ corporate applicant” . During the period of next 180 days from the date of the receipt of this Order, the respective parties are to maintain status quo as on date as far as demand of duty confirmed under the subject bill of entry was concerned. The respondents should proceed to recover and/or remit the duty as the case may be at the expiry of 180th day from the date of receipt of this Order. In case, assessee produced appropriate clarification from NCLT within such time, recovery shall be subject to such terms. If assessee failed to get any clarification from NCLT within such time, the respondents should proceed to recover the amount of duty short paid under the subject bill of entry together with interest from assessee in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In the present writ petition, the petitioner has challenged the reassessment of the Bill of Entry No. 2606926 dated 15.9.2015. It is the case of the petitioner that the amendment to Serial No. 55 to Notification No. 12/2012-Customs dated 16.3 .2012 vide Notification No.46/2015-Customs dated 17.9.2015 which increased the rate of duty from 7.5% to 12.5% cannot be said to have come into force on the date of assessment on 17.3.2012 as per the Section 25 of the Customs Act, 1962 as it stood on the date.
2. The petitioner had filed the above Bill of Entry in advance to clear the consignment of crude palm oil of edible grade in bulk. In the Bill of Entry, the petitioner had proposed to pay Basic Customs Duty (BCD) at 7.5% as per Serial No.55 to Notification No. 12/2012-Customs dated 16.3 .2012 as it stood on 15.09.2015.
3. However,after the import and at the time when the said Bill of Entry was taken up for assessment, Serial No.55 to Notification No.12/2012-Customs dated 17.3.2012 was amended vide Notification No.46/2015-Customs dated 17.9.2015. Serial No.55 to Notification No.12/2012-Customs dated 17.3.2012 increased the rate of Basic Customs Duty ( BCD) to 12.5% from 7.5%.
4. It is the contention of the petitioner that as per Section 25 (4) of the Customs Act, 1962 as it stood them every notification issued under Section 25(1) or (2A) of the Customs Act, 1962 comes into force on the date of its issue by the Central Government for publication in the Official Gazette and also when it is published and offered for sale on the date of its issue by the Directorate of Publicity And Public Relations of the Board, New Delhi.
5. It is submitted that although the notification had been published in the official Gazette on 17.9.2015, the second condition that it was offered for sale on the date of its issue by the Directorate of Publicity And Public Relations of the Board, New Delhi had not been satisfied and therefore the respondents were not justified in imposing the increased rate of duty on the petitioner as per the amended notification.
6. In support of the above submission, the petitioner has filed a copy of reply dated 12.10.2015 from the Central Public Information Officer, Government of India, Department of Publication addressed to one Sh. Pawan Awasthi of the New Delhi to the effect that the copy of the Gazette of India containing Notification No.46/2015-Customs dated 17.9.2015 was received on 21.9.2015 at 3:30 PM at the Kitab Mahal, Sale Counter of the said Department from the Government of India Press, Mayapuri , Ring Road, New Delhi and was put up to sale to the general public on 2 1.9.2015.
7. The petitioner has also filed another communication dated 30.10.2015 addressed to same person from C PIO/Officer-in Charge in response to a RTI application dated 12.10.2015 wherein it has been stated as follows:-
“ 1. The date and time of printing the Gazette notification published in the Gazette of India, Extraordinary Part II Section 3 Sub- Section (ii) containing No. 46/2015-Customs dated 17.9.2015 as per the records of Government of India Press, Mayapuri, New Delhi is 17.9.2015 (AN). The copy of record for that day is enclosed for further information
2. The Printed Gazette was dispatched from the Government of India Press, Mayapuri, New Delhi for sale on 2 1.9.2015”.
8. It is therefore submitted that the notification cannot be said to have come into force on the date of its publication in the official gazette on 19.09.2015. In this connection, reliance is placed on the decision of the Honourable Supreme Court in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) wherein the Court recognised that if the second condition was not satisfied, the notification cannot be said to have come into force.
9. Learned counsel for the petitioner fairly conceded that for a similar imports in West Bengal, the issue has been answered against the petitioner in Ruchi Soya Industries Ltd. Vs Union of India 2016 (336) ELT 463 which decision was also affirmed by the Division Bench of the Calcutta High Court in Ruchi Soya Industries Ltd. Vs Union of India 2017 (350) E LT 201 (Calcutta) and that the petitioner’s appeal in SLP No. 7077 of 2016 has been admitted and that the petitioner has been directed to keep the bank guarantee alive pending disposal of the appeal.
10. He, therefore submits since the issue has not attained finality and therefore submits this Court can come to an independent conclusion based on the available material regarding the correctness of the reassessment and imposition of the higher rate of Customs Duty on the petitioner in the impugned Bill of Entry.
11. Alternatively, it is submitted that the petitioner was under the provisions of the Insolvency and Bankruptcy Code, 2016during the pendency of the present writ petition.
12. It is submitted that a petition under Section of the aforesaid Code was filed by a Financial Creditor namely Standard Chartered Bank and that the National Company Law Tribunal, Mumbai by an order dated 8/15.12.2017 had ordered a moratorium with effect from 15.12.2017 till the completion of the Corporate Insolvency Resolution process.
13. It is submitted that the National Company Law Tribunal, Mumbai had appointed an Interim Resolution Professional and that the Resolution Professional filed M.A.No. 1721/2019 under Section 30 (6) of the aforesaid Code for approval of the Corporate Resolution Plan submitted by a Consortium led by Patanjali Ayurvedic Ltd as Corporate Application as approved by the members of the Committee of Creditors (COC).
14. It is submitted that the Resolution Professional had advertised on 21.12.2017 and called upon the creditors of the petitioner to submit their claims and since the respondent Customs Department did not come forward to participate in the said proceedings before the National Company Law Tribunal, Mumbai, it has lost all its rights as they stood extinguished. Learned counsel for the petitioner submits that thereafter an order was passed on 24.7.20 19 by the National Company Law Tribunal, Mumbai whereby the Resolution Plan was approved with certain conditions.
15. Learned counsel for the petitioner has placed reliance on the following decisions of the Court:-.
16. A reference was made to an order of [CS 1] the National Company Law Tribunal dated 4.9.20 19 to state that no party has any right to dictate the terms of the order and that was made clear that while approving the Resolution Plan, the said Tribunal deliberated every aspect of the Resolution Plan in detail and all the claims which were admitted during corporate insolvency resolution plan were being dealt by in terms of the Resolution Plan and anyone who has not filed any claim will not have any right to agitate the same after approval of the resolution plan.
17. In this connection, learned counsel for the petitioner placed reliance on the decision of the Honourable Supreme Court rendered recently in the case of Committee of Creditors of Essar Steel India Limited through authorised signatory vs. Satish Kumar Gupta and Others, (2020)8 SCC 531, wherein the Honourable Supreme Court dealt with the issue relating to rights of an operating creditor. It is submitted that since the respondent customs department was an operating creditor, it lost all its rights.
18. Opposing the prayer in the writ petition, learned counsel for the customs Department submitted that the writ petition was not maintainable as the petitioner has an alternate remedy by way of an appeal before the Appellate Commissioner.
19. It is further submitted that as on date on the very identical issue, the Calcutta High Court has answered the issue against the petitioner and therefore the writ petition is liable to be dismissed on merits.
20. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondent customs Department. I have also perused the notification and the documents filed along with the typeset of papers. I have also perused the affidavit filed in support of the present writ petition.
21. Facts are not in dispute. The petitioner has an alternate remedy to file an appeal against the assessment before an Appellate Commissioner under Section 128 of the Customs Act, 1962 against the reassessment in the impugned Bill of Entry.
22. Considering the fact that the writ petition has been admitted in the year 2015, I do not see any point in relegating the petitioner to work out the remedy before the Commissioner of Customs (Appeals) at this distant point of time straight away without examining the case on merits. The petitioner has also persuaded this court that a final decision may be given on merits as well.
23. I have considered the decision in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) cited by the learned counsel. It was rendered in the context of the prevailing practice and the provisions of the Customs Act, 1962 as it stood then. At that point of time, hosting of the notification through the website of theCentral Board of Excise and Customs had not evolved as it was in 2015.
24. Though, section 25 (4) of the Customs Act, 1962 read similarly as it stood when the dispute arose in 2001 in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC), there was a marked difference in the practice of dissemination of statutory information in 2015.
25. The use of the information technology had changed by leaps and bound since 2001. By 2015, all informations were available at the click of the button of the computer in the website of the Central Board of Excise and Customs which were also physically published in the official Gazette.
26. The answers obtained under the RTI Act also do not dispute that the fact that the amended notification had been published in the Gazette on 17.9.2015.
27. In this case, not only the notification was posted in the website of the Central Board of Excise and Customs on 17.9.2015 but was also published in the official Gazette of Government of India on 17.9.2015. Therefore, the petitioner cannot complain that it was unaware of the change in the rate of duty merely because the sale of official Gazette was purportedly made only on 21.9.2015.
28. After all , the publication of any information in the official Gazette not only signifies its authenticity but also its dissemination to the public. The practice of purchasing printed copies of Gazette publication has been done away over a period of time as the information were made available to the citizens in the official website of the Central Board of Excise and Customs.
29. Thus, the second limb of section 25 (4) of the Customs Act, 1962 requiring publication and offer for sale on the date of receipt issued by the Directorate of Publicity and Public Relation of the Board, New Delhi had been rendered vestigial over a period of time having no useful purpose in the light of the publication of such information in the website.
30. Perhaps taking note of the above provisions of the Information Technology Act, 2000 and the advancement in the use of information technology in the dissemination of information by the Central Board of Excise and Customs, the Union Parliament has also amended section 25(4) of the Customs Act, 1962 vide Finance Act, 2016 to read as under:-
“ (4) Every Notification issued under sub- section (1) or under sub- section (2A), unless otherwise provided, come into force on the date of its issue by the central government for publication in the Official Gazette.”
31. In fact, section 4 of the Information Technology Act, 2000 also makes it clear that where any law provides that information or other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information are matters‑
“(a) rendered or made available in an electronic form;
and
(b) accessible so as to be usable for the subsequent reference.”
32. The above two conditions have been satisfied and therefore the argument based on the decision of the Hon’ble Supreme Court in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) the facts of the case are to be rejected.
33. In fact, the decision of the Honourable Supreme Court in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) has not examined the issue from the perspective of section 4 of the Information Technology Act, 2000. If such information was brought to the notice of the Honourable Supreme Court, the Honourable Supreme Court would have certainly given different verdict.
34. By 2015, an assessee was no longer required to wait to buy the printed copy of the official Gazette from the bazzar or the official says counter of the Government to find out the change in the rate of duty tax after the information were hosted in the official website.
35. In fact, a reading of unamended section 25(4) of the Customs Act, 1962 would also indicate that every notification issued under sub-section (1) or sub- section (2A) shall unless otherwise provided, come into force on the date of the issue by the Central Government for publication in the official Gazette.
36. Sub-clause (4) of Section 25 of the Customs Act, 1962 as it stood prior to its amendment in 2016 merely enjoined the Central Government also to offer it for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi simultaneously. The said requirement would have suited before the intensive of the information technology in the dissemination of the information.
37. In my view, in 2015, the necessity offering for sale such publication as in the second limb of Sub-clause (4) of section 25 of the Customs Act, 1962 had become redundant and the Parliament has rightly taken note of the same and deleted it,though somewhat belatedly.
38. Before the Calcutta High Court, the Union of India had also filed an affidavit stating that the notification was also published and offered for sale nonetheless. The court has also taken the view that if the Union’s assertion of copies of notification being put up for sale on September 17, 2015 is disbelief, at the highest, would amount to noncompliance of clause (b) which would have no effect on when the notification came into force.
39. Therefore, I am not inclined to take a different stand in this writ petition. Therefore, the present writ petition has to fail based on the arguments advanced that the amending notification came inot force only on 21.9.2015.
40. In the result, I hold that the amended notification came into on the date of its publication in the official Gazette on 17.9.2015 and its publication in the website of the Central Board of Indirect Taxes on the said date.
41. I shall now proceed to examine the 2nd argument of the learned counsel for the petitioner regarding extinguishing of the rights of the respondent Customs Department to Duty in view of the Insolvency and Bankruptcy proceedings initiated against the petitioner.
42. It is the case of the petitioner that the respondent Customs Department has lost all its rights over the differential duty demanded in view of the corporate resolution plan approved by the National Company Law Board, Mumbai under the provisions of the Insolvency and Bankruptcy Code, 2016.
43. Question to be answered is, whether the “customs duty” payable under the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 is “an operational debt” of the petitioner within the meaning of Section 5 (21) of the IBC Code, 2016 and whether the respondent Customs Department is an “operational creditor” within the meaning of Section 5 (20) of the IBC Code, 2016?
44. At the outset, I would like to emphasize that such proceedings initiated at behest of a Financial creditor or an operating creditor should come in the legitimate way of the Department collecting the taxes due from the petitioner.
45. It should be remembered that Insolvency and Bankruptcy Code 2016 was enacted with a view to provide a speedy mechanism for resolving bankruptcy and insolvency of such person. It is being implemented in a phased manner. The provisions of the Companies Act, 1956 which contained provisions for winding up has been re-grafted into the IBC, 206 with modification.
46. Under the scheme of the IBC, 2016, any “operational creditor “ or a “financial creditor” to whom a corporate debtor owes any amount above Rupees One Lakh and above is entitled to file an application for corporate insolvency resolution proceeding against such debtor under Section 9(2) of the IBC, 2016 read with Rule 6 in Form 5 before the NCLT with a fee of Rs.2,000/- accompanied with documents and records as are required under Section 9(3) and under Regulation 7(2).
47. If Corporate Resolution Plan filed by Corporate Applicant is approved by the jurisdictional Company Law Board, the creditors are bound by it.
48. The expression “operational creditor” in section 5 (20) and “operational debt” in section 5 (21) is defined as follows:-
