2022 (11) TMI 220 - AT - Customs

Recovery of demand - applicant submits that as per the resolution plan approved by NCLT, no dues exists against the applicant - HELD THAT - The NCLT has passed an order by approving resolution plan of the company M/s. Ruchi Soya Industries Ltd in favor of Patanjali Ayurved Limited, Divya Yog Mandir Trust, Patanjali Parivahan Pvt. Ltd. and Patanjali Gramudhyog Nyas, who are the resolution applicant - from the terms of the resolution plan approved by the NCLT, it prima facie appears that the appellant is not liable to pay any dues. However, this tribunal is not competent to decide regarding the recovery of any dues. It is the department who has to decide whether any dues is recoverable or otherwise, in the light of the resolution plan approved by the NCLT. As per the resolution plan approved by the NCLT and in the light of Hon ble Supreme Court judgment in the case of Ghanashyam Mishra Sons Pvt. Ltd. 2021 (4) TMI 613 - SUPREME COURT , it prima facie appears that the adjudged dues cannot be recovered by the department however, this issue has to be decided by the department and not by this tribunal. For this reason, that firstly, there is no provision made in the Customs and Central Excise Act to give effect of NCLT proceedings. This tribunal being creature under the Customs Act, even though the Insolvency and Bankruptcy Code have over riding effect over all the other acts, in absence of any explicit provision under the Customs/Central Excise Act, this tribunal cannot decide finally whether the adjudged amount can be recovered by the department or otherwise. This issue has to be resolved by the respondent with the appellant/resolution applicant/NCLT/Resolution professional. It is noted that IBC proceedings are being initiated against many companies who are either appellant or respondent in the appeals pending before this tribunal. The revenue-department has no proper guideline as to what stand is to be taken in a case where the IBC proceedings is in progress before NCLT/NCLAT or at higher forum - the Central Board of Indirect Taxes Customs may consider issuing guideline/procedure for dealing with the case before this tribunal wherein, against the assesse s company IBC proceeding has been initiated. Application disposed off.

Summary

Issues:
1. Interpretation of resolution plan approved by NCLT
2. Recoverability of dues by the department in light of NCLT order
3. Competency of tribunal to decide on recovery of dues
4. Effect of Insolvency and Bankruptcy Code on Customs and Central Excise Act
5. Disposal of appeal as infructuous due to resolution plan approval

Analysis:
1. The judgment pertains to a miscellaneous application filed in view of an NCLT order dated 24.07.2019. The applicant argued that as per the resolution plan approved by NCLT, no dues exist against them, rendering the appeal infructuous. The revenue, however, stated that claims were filed with the resolution professional and subsequently with NCLT-Mumbai, indicating a potential recovery of dues.

2. The NCLT approved a resolution plan for a company, indicating no liability to pay dues for the appellant. However, the tribunal clarified that it cannot decide on the recovery of dues, emphasizing that it is the department's prerogative to determine recoverability in light of the NCLT-approved plan.

3. The tribunal noted that the department filed an appeal under Section 42 of IBC before NCLT-Mumbai, but the outcome was not evident. It highlighted that the department, not the tribunal, must resolve the issue of recovering adjudged dues, as the tribunal lacks explicit provisions to enforce NCLT proceedings under the Customs and Central Excise Act.

4. Referring to a Supreme Court judgment and the overriding effect of the Insolvency and Bankruptcy Code, the tribunal emphasized that the recoverability of dues is within the department's purview. It underscored the need for the department to engage with the appellant, NCLT, and resolution professional to address the recovery issue.

5. Consequently, the tribunal deemed the appeal infructuous based on the NCLT-approved resolution plan, allowing parties to approach the tribunal if an amicable resolution is not reached. It also urged the Central Board of Indirect Taxes & Customs to issue guidelines for cases where IBC proceedings are ongoing, emphasizing the need for clarity in such situations.

This detailed analysis of the judgment showcases the nuanced considerations surrounding the interpretation of the NCLT-approved resolution plan, the recoverability of dues, and the tribunal's jurisdiction in such matters, culminating in the disposal of the appeal as infructuous.