CIRP commenced before expiry of 120 days as provided in Customs Act, 1962 for exercising of option to pay the redemption fine does not impact on confiscation of the goods by Custom Authorities and vesting right of Central Government under Section 126 of the Custom Act – Principal Commissioner of Customs and Ors. Vs. Pratim Bayal RP for B.K.M. Industries Ltd. – NCLAT New Delhi
Hon’ble NCLAT held that:
(i) The submission, which has been pressed by the Counsel for the Respondent is that since the period of 120 days did not expire and the CIRP commenced, the vesting of goods in Central Government shall not take place. Vesting of goods under Section 126(1) is not dependent on exercise of option to pay the redemption fine. The payment of redemption fine and redeeming the goods is a benefit, which is provided by the statute, which option can be availed after the confiscation of the goods.
(ii) The judgment of the Hon’ble Supreme Court in Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes & Customs (2022) ibclaw.in 103 SC was on entirely different footingThe clear provision of Section 126(1) and the scheme of Section 125, which is for different purpose and object. Accordingly to our considered opinion vesting of goods is on confiscation by the Central Government by provision of Section 126(1) and the option to pay redemption fine and redeeming the goods, is only a benefit given to the Corporate Debtor, which however, shall not arrest the vesting of the goods as contemplated by Section 126(1). We, thus, do not accept the submission of learned Counsel for the Respondent in the present case that till the option for payment of redemption fine is not exercised within 120 days, the goods continued to vest in the Corporate Debtor.
