Case Law Details
Industrial Development Bank of India Vs Superintendent of Central Excise and Customs and Others (Supreme Court of India)
The Hon’ble Supreme Court in Industrial Development Bank of India v. Superintendent of Central Excise and Customs and Others [Civil Appeal No. 2568 of 2013 dated August 18, 2023] set aside the order passed by the division bench of the Hon’ble Andhra Pradesh High Court and held that the position in law was that the debt ‘due and payable’, when falls within the four corners of clause (a) to Section 530(1) of the Companies Act, would be treated as preferential payment, but it would not override and be given preference over the payments of overriding preferential creditors covered under Section 529A of the Companies Act.
Facts:
Industrial Development Bank of India (“the Appellant”) provided financial assistance to the M/s. Sri Vishnupriya Industries Limited (“the Company”) during the period 1994-2000. As security, the Company had hypothecated movable properties. The hypothecated movable property, namely, machinery and its components, imported from Italy during the years 1998-1999 were warehoused in a private bonded warehouse by executing bond in terms of Section 59(1) of the Customs Act, 1962 (“the Customs Act”).
The Company has not cleared the goods for home consumption in terms of Section 47 of the Customs Act, even after expiry of the extended period of warehousing. Thereafter the Revenue Department issued a Show Cause Notice dated February 17, 2000 and after considering the reply of the company vide the order dated September 15, 2000 and Order dated October 10, 2000 confirmed the levy of customs duty and when the company did not paid the customs duty the Revenue Department vide an Order dated December 19, 2000 auctioned the warehoused goods for recovery of the customs duty by relying on the powers conferred under Section 72(2) read with Section 142 of the Customs Act.
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