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Jaiprakash Associates Limited vs. Office of the Commissioner of Customs, Air Cargo Complex Import & Anr.

Writ Petition (Civil) · 2026:DHC:7356-DBDecided 2 Sept 2026New Delhi Bench
W.P.(C) 10387/2026CNR: DLHC010334532026
Justice Anil Kshetarpal · Justice Shail Jain

Background

Jaiprakash Associates Limited had imported Digital and Network Video Recorders in September 2023 and claimed a concessional customs duty rate. Later, while the company was going through Corporate Insolvency Resolution Process (CIRP) under the IBC, the Customs Department issued a show-cause notice alleging the company had wrongly availed a lower duty rate, and eventually confirmed a differential duty demand, interest, and penalty, even though this liability related to a transaction that occurred before the company's insolvency proceedings began, and the Customs Department had never filed a claim for it during the CIRP. By the time of this final order, the company's Resolution Plan had already been approved by the National Company Law Tribunal (NCLT).

Decision Breakdown

The Court held that under Section 31(1) of the IBC, once a Resolution Plan is approved by the NCLT, it becomes binding on all creditors, including government departments, and any pre-insolvency claim that was not submitted during the CIRP stands extinguished. Since the customs liability arose from an import that took place well before the insolvency proceedings began, and the Customs Department admittedly never filed a claim before the Resolution Professional despite the public announcement inviting claims, the department could not later revive and enforce that claim after the Resolution Plan was approved. The Court distinguished this from cases where Customs Authorities can still determine (assess) a liability during an ongoing CIRP: that power exists, but it cannot be used to enforce recovery of a claim that was never submitted and got extinguished once the plan was approved. The Court accordingly quashed the customs order confirming the duty, interest, and penalty, without commenting on the merits of the underlying classification dispute.

Lesson Learnt

Once a company's insolvency Resolution Plan is approved by the NCLT, creditors, including tax and customs authorities, lose the right to chase old, pre-insolvency dues that they failed to formally claim during the insolvency process; the law intends for the revived company to start with a "clean slate."

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