In case of conflict, IBC prevails over Customs Act: Supreme Court

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.