The Amravati Bench of National Company Law Tribunal (NCLT) has held that customs duty is not payable by corporate debtor for sale of floating dry dock (FDD) to foreign-buyer during liquidation.
The bench of Rajeev Bharadwaj (Judicial Member) and Sanjay Puri (Technical Member) has directed the Customs Department to refund the amount of Rs. 6,39,26,500 Customs Duty paid under protest (by the Liquidator) to the Applicant.
The Respondent/Corporate Debtor (CD) was an integrated offshore and Marine Engineering Company offering ship repairing, ship building, conversion, offshore fabrication and related services.
In the year 2012, CD imported a Floating Dry Dock (FDD) under Bill of Entry no. 8617966 dt. 29.11.2012 by claiming full exemption. The FDD was also registered as the “Ship Repair Unit” vide Registration Certificate bearing No. SRU/2012/04 dated 22.10.212 issued by the Director General of Shipping.
It is submitted that the CD has not paid any custom duty by virtue of availing duty exemption against Sr. No. 459 of Notification No. 12/2012-Customs dated 17.03.2012 read with condition No. 79 appended to the Sr. No. 459. Upon failure of fulfilment of the post importation conditions at any stage later after import, laid down in the condition no. 79′, the Customs Department is entitled to recover the duty foregone amount.
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As per the Form B Public Announcement dt. 04.11.2021 issued by the Liquidator the stakeholders were invited to submit claims on or before 01.12.2021, later the assets of CD were auctioned as per the notice. The Liquidator requested the Applicant to undertake essential maintenance and repairs of the FDD that is required to keep it afloat. The Liquidator later exported the FDD to the foreign buyer, M/s. Asyad Dry Dock LLC, Oman vide Shipping Bill and got customs clearance on the same day i.e. 10.02.2023.
The tribunal held that the Speaking Order No. 04/2023 (KVK) issued on 09.05.2023 is the outcome of a newly initiated legal proceeding passed during the moratorium period imposed under Liquidation period. The Applicant themselves submitted that the Custom Duty imposed is the result of the sale of FDD to the foreign buyer in the year 2023 and is not the result of any action of the CD during the pre-CIRP period for it to be considered as a continuing liability and a pending legal proceedings. Therefore, it is clear that the Speaking Order is in violation of the Moratorium imposed under Section 33(5) of the IB Code, 2016.
Case Details
Case Title: The Customs Department Vs. Sembmarine Kakinada Ltd.
Case No.: IA(I.B.C) – 253/2023
Date: 07-01-2025
Counsel For Petitioner: Santhi Chandra
Counsel For Respondent: Titiksha Jain
