The Supreme Court on Friday held that Insolvency and
Bankruptcy Code (IBC) will prevail over the Customs Act, to the extent that
once moratorium proceedings begin under the Code, the customs authority does
not have the power to initiate any recovery actions for dues from the corporate
debtor. The top court also held that the customs authority cannot claim title
over the goods and issue notice to sell the goods in terms of the Customs Act
when the liquidation process has been initiated against the corporate debtor.
A bench of Chief Justice NV Ramana and Justices JK Maheshwari
and Hima Kohli set aside an order of the National Company Law Appellate
Tribunal (NCLAT) by which it had allowed the appeal of the Central Board of
Indirect Taxes and Customs (CBIT-C) against the verdict of NCLT directing the
release of certain goods lying in the Customs Bonded Warehouses without payment
of customs duty and other levies.
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