CUSTOMS ACT, 1962

SECTION 28

NOTICE FOR PAYMENT OF DUTIES, INTEREST ETC. – (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may, – (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year;

(b) in another case, within six months, from the relevant date; serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made requiring him to show cause why he should not pay the amount specified in the notice.

Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any willful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words “one year” and “six months”, the words “five years” were substituted.

Explanation : Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be.

(2)   The proper officer, after considering the representation, if any made by the person on whom notice is served under sub-section (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount determined.

(3)   For the purposes of sub-section (1), the expression “relevant date” means – (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of the goods;

(b)   in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof;

(c) in a case where duty or interest has been erroneously refunded, the date of refund; (d) in any other case, the date of payment of duty or interest.

SECTION 142

RECOVERY OF SUMS DUE TO GOVERNMENT. – (1) Where any sum payable by any person under this Act is not paid, – (a) the proper officer may deduct or may require any other officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of customs: or

(b)   the Assistant Commissioner of Customs may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the Assistant Commissioner of Customs or such other officer of customs; or

(c)    if the amount cannot be recovered from such person in the manner provided in clause (a) or clause (b) –

(i)      the Assistant Commissioner of Customs may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any Property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue; or

(ii)    the proper officer may, on an authorization by a Commissioner of Customs and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such’ person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus, if any, to such person.

(2) Where the terms of any bond or other instrument executed under this Act or any rules or regulations made there under provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section

CUSTOMS (ATTACHMENT OF PROPERTY OF DEFAULTERS FOR
RECOVERY OF GOVERNMENT DUES) RULES, 1995

Notification No. 31/95-Cus. (N.T.), dated 26-5-1995. amended by Notification No. 67/97- Cus. (N.T.), dated 11-12-1997

In exercise of the powers conferred by section 156 read with section 142 of the Customs Act, 1962 (52 of 1962), the Central Government hereby makes the following rules, namely:-

CHAPTER I
PRELIMINARY

1. Short Title and Commencement. – (1) These rules may be called the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995. (2) They shall come into force on the date of their publication in the Official Gazette.

2. Definition. – In these rules, unless the context otherwise requires –

i.                ‘Act’ means the Customs Act, 1962 (52 of 1962);

ii.              ‘Government dues’ means any duty or drawback to be recovered from any person or any interest or penalty payable by any person under the Act and has not been paid.

iii.         ‘Certificate’ means the certificate required to be issued by an [Assistant Commissioner of Customs or Deputy Commissioner of Customs] under clause (c) of sub-section (1) of section 142 of the Act.

iv.         ‘Commissioner (iv)’ means any person appointed as Commissioner of Customs or Commissioner of Central Excise under the Act.

v.          ‘Proper Officer’ means an officer subordinate to the Commissioner and not below the rank of Assistant Commissioner of Customs or Assistant Commissioner of Customs and Central Excise, who is authorised by the Commissioner for the purpose of attachment and sale of defaulter’s property and for realising the amount mentioned in the certificate.]

vi.               ‘Defaulter’ means any person from whom government dues are recoverable under the Act.

vii.    Other words or terms used in these rules shall have the same meaning assigned to
them under the Act.

CHAPTER II
PROCEDURE FOR ATTACHMENT OF PROPERTY

3. Issue of Certificate. – Where any Government dues are not paid by any defaulter, the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] may prepare a Certificate signed by him specifying the amount due from such person and send the same to the Commissioner having jurisdiction over the place in which the defaulter owns any movable or immovable property or resides or carries on his business or has his bank accounts.

4. Issue of Notice. – On receipt of the Certificate mentioned in rule 3 above, the Commissioner may authorise any officer subordinate to him to cause notice to be served upon the defaulter requiring the defaulter to pay the amount specified in the Certificate within seven days from the date of the service of the notice and intimate that in default, such subordinate officer is authorised to take steps to realise the amount mentioned in the Certificate in terms of these rules.

5. Attachment of property – If the amount mentioned in the notice issued in terms of the preceding rule is not paid within seven days from the date of service of this notice, the Proper Officer may proceed to realise the amount by attachment and sale of defaulter’s property. For this purpose, the proper officer may detain the defaulter’s property until the amount mentioned in the Certificate together with the cost of detention is paid by the defaulter.]

6. Attachment not to be excessive. – Attachment by arrest or distrain of the property shall not be excessive, that is to say, the property attached shall be as nearer as possible proportionate to the amount specified in the Certificate.

7. Attachment between Sunrise and Sunset. – The attachment of the property of the defaulter by arrest or distrain shall be made after sunrise and before sunset and not otherwise.

8. Inventory – After attachment of the property of the defaulter, the Proper Officer shall prepare an inventory of the property attached and specify in it the place where it is lodged or kept and shall hand over a copy of the same to the defaulter or the person from whose charge the property is distrained.]

9. Private alienation to be void in certain cases.- (i) Where a notice has been served on a defaulter under rule 4, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the written permission of the Proper Officer.

(ii) Where an attachment has been made under these rules, any private transfer or delivery of the property attached or of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.

10. Share in property – Where the property to be attached consists of the share or interest of the defaulter in property belonging to him and another as co-owners, the attachment shall be made by a notice to the defaulter prohibiting him from transferring the share or interest or charging it in any way.

11. Attachment of property in custody of court or public officer. – Where the property to be attached is in the custody of any court or Public Officer, the attachment shall be made by a notice to such court or officer, requesting that such property, and any interest or dividend becoming payable thereon, may be held subject to the further orders of the Proper Officer by whom the notice is issued.

Provided that, where such property is in the custody of a court, any question of title or priority arising between the Proper Officer and any other person, not being the defaulter, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such court.

12. Service of notice of attachment. – A copy of the order of attachment shall be served on the defaulter in the same manner as prescribed for the service of order or decision in section 153 of the Act.

13. Proclamation of attachment. – The order of attachment shall be proclaimed at some place on or adjacent to the property attached by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and on the notice board of the office of the Proper Officer.

14. Property exempt from attachment. – (i) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale for execution of a decree of a Civil Court shall be exempt from attachment and sale under these rules.

(ii) The decision of the Proper Officer as to what property is so entitled to exemption shall be final.

CHAPTER III
PART A
PROCEDURE FOR SALE OF PROPERTY

15. Sale of property. – If the amount mentioned in the Certificate together with the cost of detention of the property is not paid within a period of thirty days from the date of attachment of the property, the Commissioner may authorise the Proper Officer to proceed to realise the amount by sale of the defaulter’s property in public auction :

Provided that the Commissioner shall be competent to fix the reserve price in respect of any property of the defaulter to be sold in public auction and order that any bid shall be accepted only on the condition that it is not less than such reserve price.

16. Negotiable instruments and shares in a corporation. – Notwithstanding anything contained in these rules, where the property to be sold is a negotiable instrument or a share in a corporation, the Proper Officer may, instead of directing the sale to be made by public auction, authorise the sale of such instrument or share through a broker.

PART B
SPECIAL PROVISIONS IN RESPECT OF SALE OF IMMOVABLE PROPERTY

17. Proclamation of sale. – Where any immovable property is ordered to be sold, the Proper Officer shall cause a proclamation of the intended sale to be made in the language of the district.

18. Contents of proclamation. – A proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible –

(a)      the property to be sold;

(b)      the revenue, if any, assessed upon the property or any part thereof;

(c)      the amount for the recovery of which sale is ordered;

(d)      the reserve price, if any, below which the property may not be sold; and (e) any other thing which the Proper Officer considers it material for a purchaser to know in order to judge the nature and value of the property.

19. Mode of making proclamation. – (i) Every proclamation for the sale of immovable property shall be made at some place on or near such property by beat of drum or other customary mode, and a copy of the proclamation shall be affixed on a conspicuous part of the property and also upon a conspicuous part of the office of the Proper Officer.

(ii)    Where the Proper Officer so directs, such proclamation shall also be published in a local newspaper and the cost of such publication shall be deemed to be costs of the sale.

(iii)     Where the property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot, in the opinion of the Proper Officer, otherwise be given.

20. Setting aside of sale where defaulter has not saleable interest. – At any time within thirty days of the sale, the purchaser may apply to the Proper Officer to set aside the sale on the ground that the defaulter had no saleable interest in the property sold.

21. Confirmation of sale.- (i) Where no application is made for setting aside the sale under the foregoing rule or where such an application is made and disallowed by the Proper Officer, the Proper Officer shall (if the full amount of the purchase money has been paid) make an order confirming the sale, and, thereupon, the sale shall become absolute.

(ii) Where such application is made and allowed and where, in the case of any application made to set aside the sale on deposit of the amount and penalty and charges, the deposit is made within thirty days from the date of the sale, the Proper Officer shall make an order setting aside the sale :

Provided that no order shall be made unless notice of the application has been given to the person affected thereby.

22. Sale Certificate. – (i) Where sale of any immovable property has become absolute under these rules, the Proper Officer shall grant a certificate specifying the property sold and the name of the person who at the time of sale is declared to be the purchaser.

(ii) Such certificate shall state the date on which the sale became absolute.

23. Purchaser’s title. – (i) Where any property is sold in terms of these rules, there shall vest in purchaser’s the right, title and interest of the defaulter at the time of the sale even though the property itself be specified.

(ii) Where immovable property is sold in terms of these rules and such sale has become absolute, the purchaser’s right, title and interest shall be deemed to have vested in him from the time when the property is sold, and not from the time when the sale becomes absolute.

24. Irregularity not to vitiate sale, but any person injured may sue. – No irregularity in the conduction of sale of any property shall vitiate the sale but any person sustaining substantial injury by reason of such irregularity at the hand of any other person may institute a suit in a Civil Court against him for compensation, or if (such other person is the purchaser), for the recovery of specific property and for compensation in default of such recovery.

25. Prohibition against bidding or purchase by officer. – No officer or other person having any duty to perform in connection with any sale under these rules, either directly or indirectly, shall bid for, acquire or attempt to acquire any interest in the property sold.

26. Prohibition against sale on holidays. – No sale under these rules shall take place on a Sunday or other general holiday recognised by the State Government or on any day which has been notified by the State Government a local holiday for the area in which the sale is to take place.

CHAPTER IV
MISCELLANEOUS

27. Disposal of the sale proceeds. – The sale proceeds of the property of the defaulter shall be utilised in the following manner, namely :-

(a)                the sale proceeds shall first be utilised for meeting the cost of sale;

(b)               the balance shall be utilised for satisfaction of the amount mentioned in the Certificate issued under rule 3 together with the cost of detention of the property;

(c)                the balance, if any, shall be utilised for recovery of any other Government dues payable by the defaulter; and

(d)               the balance, if any, shall be paid to the defaulter.

28. Procedure on death of defaulter. – If at any time after the Certificate has been issued by the [Assistant Commissioner of Customs or Deputy Commissioner of Customs], the defaulter dies, the proceedings under these rules may be continued against the legal representatives of the defaulter, and the provisions of these rules shall apply as if the legal representatives were the defaulter.

PROCEDURE OF DEMAND/ RECOVERY OF DUES OF CUSTOMS
(AUTHORITY – CBEC’S CUSTOMS MANUAL OF INSTRUCTIONS)

Section 28 of the Customs Act, 1962 provides for recovery of any duty which has not been levied or has been short levied or erroneously refunded or if any interest payable has not been paid, part paid or erroneously refunded provided a notice demanding such duties/interests is issued within the time limit specified in that Section. Where the short levy is by reason of collusion or any willful misstatements or suppression of facts by the Importer the period for issuing the demand notice is five years from the relevant date specified in Section 28

2.                  When the short levy is discovered or pointed out by Audit, a notice is served on the importer or the persons chargeable with duty to show cause as to why the amount due should not be recovered from him. Normally a period of 15 days is given to show cause why he should not pay the amount The basis and the working of the short levy is required to be clearly stated in the Show Cause Notice. Copies of relied upon documents are also be furnished to the noticee, to enable him to represent his case. All such notices are required to be sent by Registered Post or given to the Agent under receipt/acknowledgement after being entered in the less charge demand register maintained in the respective sections of the Custom House

3.                  It is important that the demand should be served on the importer within the time limit under section 28 of the Customs Act as otherwise the demand shall become time barred and legally not recoverable. In the case of IAD or CRA objections demands are issued immediately on receipt of the objection wherever it appears that there may be a short levy of duty as indicated in the objection.

4.                  Demands issued for short levy of duty as a result of audit objection, arising out of assessment etc. are to be finalised within 6 months from the date of issue of the demands and cases which could not be finalised should be reviewed for examining the reasons for delay and adopting suitable remedial measures.

5.                  Upon receipt of the reply from the Noticee the matter is examined in detail and the Noticee is offered an opportunity of Personal Hearing to explain his case before the adjudicating authority. After the Personal Hearing the adjudicating authority shall examine the material placed before him and shall come to the conclusion after taking into consideration the provisions of Law concerning the issue Generally, the issues involved are misdeclaration of the description of the goods resulting in wrong classification and levy of lesser duty, misdeclaration of value, quantity and weight having a bearing on duty, calculation error resulting in short levy of duty, non inclusion of certain components of value in the assessable value etc.

6. The adjudicating authority is required to take an independent decision as an quasi-judicial authority and pass appropriate orders either determining the amount of short levy in terms of section 28 (2) of Customs Act or dropping the proceedings where

it is found that thereis no short levy. in either case an appealable order is to be issued by the adjudicating authority. The duties, fines and penalties imposed, if any, are required to be paid immediately, unless the party files an appeal and obtains a stay from the competent authority.

7.            As regards breach of condition of the notification after availing of the exemption thereunder, it has been held by the Apex Court that the obligation under a notification is a continuing one and the Customs authorities are well within their power to recover the duty whenever it comes to their notice that the importer has failed to fulfil the conditions. In such cases the demand can be issued irrespective of the time factor and the amount can be recovered in terms of the provisions of the Customs Act.

8.            The confirmed demands are enforced and recoveries effected in accordance with the provisions under Section 142 of Customs Act, 1962. Where it is not possible to recover the amount by adjusting against any money which the department owes to such persons, or by detaining and selling any goods belonging to such persons which are under the control of the Department, action is initiated to recover the Government dues through the District Collector as if it were an arrears of land revenue. Powers are also vested with Customs for attaching/detaining and selling any movable or immovable property belonging to/or under control of such person, and these can also be resorted to.

Circular No. 54/95-Cus.

dated 30/5/95

F.No. 495/15/94 – CUS VI

Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject : Finance Act, 1995 – Delegation of powers to customs officers under Section 142 of the Customs Act, 1962 – Instructions reg.

The undersigned is directed to say that in terms of the amended section 142 of the customs Act, 1962, in addition to the existing modes of recovery of govt. dues mentioned therein, a provision has been made to empower custom officers to attach and sell the moveable and / or immovable property of a defaulter as per the rules to be framed in this behalf by the Central Government. These rules have since been notified vide Notification No. 31/95-Cus (NT) dated 26.05.95.

2.         In this connection, it may be noted the provision of recovery through district authorities has been retained under section 142 (1)(c)(i), while empowering the proper officer to take recourse to recovery through custom officers. However, simultaneous action through district authorities and through custom officers for recovery of govt. dues should not be taken. The proper officer should take recourse to action under clause (c) of section 142(1) only when the amount in question cannot be recovered under clauses (a) or (b) of section 142 (1).

3.         For action under clause (c) or section 142(1) or the Custom Act, 1962, the following guidelines may be followed:-

a)           Where the amount recoverable does not exceed rupees one lakh, certificate action should first be taken through the district authorities under sub – clause (i).

b)             In case the amount is not recovered by the district authority within three months, the district authority should be informed by registered A/ D letter to discontinue recovery and action should be taken to initiate recovery under sub-clause (ii) through the Commissioner of customs/ C.Excise having jurisdiction over the place where the defaulter is having jurisdiction over the place where the defaulter is having property, or is residing, or is carrying out his business, or has his bank accounts.

c) In case the amount recoverable exceeds rupees one lakh, the proper officer should initiate recovery action directly through the concerned commissioner of Customs/ C.Excise under sub-clause (ii).

4.         A proper record should be maintained of cases in which recovery action is initiated under sub-clause (ii) of clause (c) of section 142(1) of the Customs Act, 1962.

5.         In case you need any clarification or if you have any suggestions on the subject, please intimate at the earliest.

Sd/-

(T.R. Kapur)

Under Secretary (Cus. VI)

Dues – Recovery of arrears of revenue under amended Section 142 (1) of the Customs Act, 1962 read with Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995.

CBEC – Circular No. 56/96-Cus., dated 14/11/96

F.No. 450/72/96- CUS- IV

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, New Delhi

Subject: Recovery of arrears of Revenue under amended Section 142(1) of the Customs Act 1962 read with Customs (Attachment of Property of Defaulters for Recovery of Government of Dues) Rules, 1995.

I am directed to refer to amended section 142(1) of the Customs Act, 1962 read with Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules 1995, which enable the Department to create a legal framework to realise dues of the Government by attaching, distraining movable and immovable property of the person and then disposing the said property to recover the dues. These provisions are in addition to the existing other modes of recovery. The scope of these instructions is to prescribe a procedure for implementing the amended provisions. Board’s existing instructions regarding implementation of certificate action etc. remain unchanged.

2.         It would be noted that recovery through District Collector has been retained under sub-clause (i) of Section 142(1) of the Act while empowering the Proper Officer to recover dues through Customs officers. However, the Board has already issued appropriate directions vide its letter F.No. 495/15/94-CUS.VI dated 30/5/95 to the effect that simultaneous action for recovery of Government dues should not be taken through district authorities and through Customs Officers. It has further been laid down in the aforesaid communication that even action under clause (c) of Section 142(1) of the Act should be taken only when Government dues have not been recovered under Clause (a) or (b) of the aforesaid Section 142(1) of the Act.

3.         You are further aware that the Board has already laid down guidelines to initiate recovery action directly through the concerned Commissioners of Customs/ Central Excise under Sub-clause (ii) of Clause (C) of Section 142(1) of the Act only in cases where the recoverable amount exceeds Rs. one lakh or where the District Collector to whom a Certificate stipulated under sub-clause (i) of Clause (C) of Section 142(1) of the act had been sent, has not been able to effect the recovery within 3 months. In such cases the District Collector should be informed by a letter through Regd. Post to discontinue recovery and action should be initiated for recovery under sub-clause (ii) clause (C) of Section 142(1) of the Act.

4.           Where the Government dues have not been paid by the defaulters, the Asstt. Commissioner of Customs should under Rule 3 of the Rules prepare a certificate in the endorsed form i.e. as Appendix-I specifying therein the amount due from such person and should send the same to the Commissioner having jurisdiction over the place in which the defaulter owns any movable or immovable property or resides or carries on his own business or has his bank accounts.

5.         To have ready access to the information about the defaulter’s movable or immovable property, his residence and details about his business or bank accounts, it would be necessary to build a date base from the information available in appropriate quarter such as the DGFT’s office, (where applications for grant of an importer exporter code number are filed.) The Customs House should also develop such data base from other sources such as Income Tax, Sales Tax etc.

6.         The Commissioners of Customs or Commissioner of Central Excise would direct the concerned Authorised Officer not below Asstt. Commissioner to cause a Notice (Appendix – II)1 to be served upon the defaulter requiring to pay the amount specified in the Certificate within 7 days of the Notice. The Authorised Officer should thereafter take steps to realise the amount mentioned in the Certificate in terms of the rules after expiry of stipulated period of seven days.

7.         If the amount mentioned in the certificate (Appendix-I) / notice (Appendix-II) is not paid within seven days from the date of the service of the notice, the Authorised Officer should proceed to realise the amount by attachment and sale of the defaulters property in accordance with the procedure of attachment and proclamation and sale explained in the Annexures A, B respectively.

8.         One of the Assistant Commissioner of Customs may be authorised as proper officer under the rules and special cell may be created in the Customs House/ Central Excise Headquarters for implementing the provisions of these rules.

9.         The Commissioner may issue suitable Standing Order on the subject endorsing a copy to the Board and the Directorate General of Inspection, Customs & Central Excise, New Delhi. With the issuance of these instructions it is expected that speedy action would be initiated for the recovery of pending Government dues under the provisions of the Customs Act, 1962. This procedure should be reviewed after one year. The Commissioners are requested to bring the difficulties faced to the Board’s notice within 6 months.

ANNEXURE’A’

ATTACHMENT

1.                  There is in Law a distinction between movable & immovable property. The mode and procedure of attachment of the two categories of properties differ in significant respects. Hence, the standard format for the two types of property which are being prescribed as distinct from each other. The standard format which should be used for ordering the attachment for the movable and immovable property is given respectively in Appendix IIIA & IIIB. A copy of the order of attachment is to be served on the defaulter in the same manner as is prescribed for the service of an order or decision in Section 153 of the Act.

2.                  It is also necessary that the order of attachment should be proclaimed at some place on or adjacent to the property attached by customary mode. A copy of the attachment order is to be affixed on a conspicuous part of the property as well as on the notice board of the office of the authorized officer.

3.                  While issuing the order of attachment the provisions of Rules 9 and 10 of the Rules should be kept in view. It is necessary to bring the provisions of the aforesaid Rules to the defaulter’s notice by a written communication served in the same manner as has been stipulated for the service of the principal notice of attachment in the foregoing paras. The standard format which could be used for doing so is given as Appendix IV.

4.                  In some odd cases it may happen that the property to be attached is in the custody of a Court or Public Officer. In such cases the authorized officer is required to give a notice (in Appendix VI) to such court or officer requesting that such property and any interest or dividend becoming payable thereon may be held subject to the further orders of the authorized officer issuing the notice. In case there is any dispute relating to the question of title or priority between the authorized officer and any other person not being the defaulter who claims to be interested in such property by virtue of any assignment, attachment or otherwise, the same would have to be determined by the court and not by the authorized officer.

5.                  If the defaulter does not pay the Government dues as mentioned in the Certificate (Appendix-I) within a period of 30 days together with the cost of detention of the property, the authorized officer should obtain the Commissioner’s order for realizing the amount by sale of the defaulter’s property in public auction.

6.                  Commissioners are competent to fix the reserve price in respect of any property of the defaulter to be sold in public auction and further order that any bid shall be accepted only on the condition that it is not less than such reserve price. They may utilize the services of the valuation Cell of the Income Tax Deptt. or authorized Govt. approved valuers.

Similarly in regard to valuation of shares, authorized agencies like SEBI, Stock Exchanges could be consulted.

7.                  The order of attachment of negotiable instrument shall be in the form Appendix VIIA.

8.                  In the case of shares held by the defaulter in a company, the order in Appendix VIIB shall be issued both to the defaulter and the principal officer of the company prohibiting them from making any transfer of the shares. A copy of the prohibitory order should also be affixed on the notice board of the authorized officer.

ANNEXURE ‘B’

PROCLAIMATION AND SALE

1.                  When the authorized officer acting under Rule 15 has obtained the Commissioner’s order to the effect that the immovable property belonging to the defaulter should be sold he has to give proclamation of such intended sale.

2.                  The proclamation should be in the language of the district in which the particular property is situated and one proclamation should be issued for each defaulter. It is not necessary to give notice to the defaulter before the sale proclamation is settled. Once a notice is issued, there is not necessity of issuing a fresh notice if subsequently a sale is to be adjourned.

3.       The proclamation which is the prelude to sale should contain the following
particulars i.e.:

(i)                    The revenue assessed upon the property or part thereof;

(ii)                   The reserve price below which the property may not be sold; and

(iii)       Any other thing which the authorized officer considers it material for the
purchaser to know in order to judge the nature and value of the property.

4.                  Every proclamation of sale should be made in the following manner:

(A)    By a customary mode (announcement by loud speaker may also be resorted to) at some place on or near the property to be sold. Omission to beat drum as required by Rule 19 is “material irregularity”.

(B)     A copy of the proclamation shall be affixed:

(i)      Where several properties are put up for sale, copy of the proclamation should be affixed on each property separately.

(ii)       Upon a conspicuous part of the office of the authorized officer. This condition must be scrupulously followed in ever case.

5. The sale of immovable property made in execution of a Certificate becomes absolute when the authorized officer makes an order confirming the sale. It is mandatory upon the authorized officer to make the order confirming the sale when the following conditions are fulfilled.

(i)                    When no application is made for setting aside a sale under Rule 20;

(ii)                   (a) When such an application has been made and the same is disallowed by the authorized officer; and

(b) the full sum of the purchase money has been paid.

6.         The authorized officer can also make an order not confirming the sale but setting the
same aside, if,

(a)                an application under Rule 20 has been made and is allowed by him,

(b)        an application under Rule 20 has been made and all the conditions mentioned
in that Rule are satisfied.

Before setting aside the sale the authorized officer is required to give notice to the person(s) affected thereby which expression includes the defaulter, the auction purchaser, a transferee from the auction purchaser, a transferee from the auction purchaser after the sale but before the same is confirmed.

7.                  The order of confirmation of sale of immovable property under Rule 21 should be in the form of Appendix X. The notice to interested parties under Rule 21 (ii) of the Rules, to show cause why sale should not be set aside shall be in the form of Appendix IX.

8.                  When the sale of immovable property becomes absolute, the authorized officer should grant a certificate in which are certified the details of the property sold, the name of the person declared as purchaser and the date on which the sale had become absolute. The certificate as given in Annexure XI is to be granted to the purchaser. Where a purchaser is dead, the certificate may be granted to his legal representative.

9.                  It is to be noted that departmental officers having any duty to perform in connection with any sale under the Rules either directly or indirectly are prohibited from bidding for, acquiring or attempting to acquire any interest in the property sold through public auction. Needless to say that similar instructions also exist in respect of the sale of confiscated goods or goods sold through public auction in terms of Section 48 of the Act.

10.              The rules specifically prohibit conducting any sale through public auction on a Sunday or other general holidays recognized by the State Government or on any day which has been identified by the State Government as local holiday for the area in which the sale is to take place. The provisions of this rule are at variance with the instructions as contained in the Disposal Manual for holding public auction in respect of confiscated goods or goods proposed for sale under Section 48 of the Act. Since there is a statutory bar on conducting public auction in respect of the property arrested and distrained under Section 142 (1) (c) (ii), particular care should be taken to scrupulously abide by the provisions of Rule 26 as non-compliance may vitiate the sale altogether.

11.              Once the movable or immovable property of the defaulter is sold in terms of sub­clause(ii) of clause (c) of Section 142(1) of the Act and/or the provisions of the Rules the sale proceeds are to be utilized in the manner laid down under Rule 27 of the Rules, The expression “sale proceeds” connotes the conversion of the property into its equivalent value of money.

12.              When the property belonging to the defaulter is sold and the sale proceeds realized, the sale proceeds will have to be distributed in the following order of priority:

(a)                         In the first place, the authorized officer shall be paid the cost incurred by

him. An instance of the cost so incurred by the authorized officer is where

under Rules 13,17 and 19 (ii) of the Rules the authorized officer is to insert

advertisement(s) in the local newspaper. Sums payable by the authorized

officer for incurring such expenditure should be deemed to be the cost of sale and would have to be deducted from the total sale proceeds of the defaulter’s property.

(b)             The amount due under the Certificate issued under Rule 3 together with the cost of detention of the property shall then be utilized for specification of the amount mentioned in the Certificate. It may, however, be noted that in the case of sale of immovable property no disbursement should be made until the sale has been confirmed by the authorized officer under Rule 21 of the Rules.

(c)             If any balance remains over after defraying the amount(s) mentioned at (a) and (b) above, then out of such balance any amount recoverable from the defaulter under the Act which may be due upon the date of realization of the sale proceeds shall be paid to the Asstt. Commissioner of Customs to whom such payment is due.

(d)      The balance, if any, left over after making the payment(s) referred to at (a),
(b) and (c) above shall be paid to be defaulter.

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