2023 (5) TMI 381 - AT - Central Excise

Disallowance of availment of cenvat credit of service tax - Corporate Insolvency Resolution Process (CIRP) was initiated in respect of the appellant under the provisions of the Insolvency and Bankruptcy Code, 2016 - It is submitted by the Ld. Counsel that in view of the order passed by the NCLT, the Resolution Plan may be taken into consideration and the appeal may be disposed accordingly. HELD THAT - NCLT passed the following order (i) Maximum of Rs.25 crores or the liquidation value allocable towards the statutory dues, whichever is higher, is proposed to be made towards claims by Government Authorities. (ii) All claims or liabilities etc owed to any Government Authority by the Corporate Debtor, in relation to any period prior to the Effective Date or on acquisition of control of the Corporate Debtor by the Resolution Applicant through the SPV proposed to stand extinguished upon the receipt of the said amount towards statutory dues pursuant to the approval of the resolution plan by the Hon ble NCLT. In view of the order passed by the NCLT, the appeal filed by the appellant viz. Ruchi Soya Industries Limited is disposed of accordingly.

Summary

Issues involved:
The disallowance of cenvat credit of service tax, initiation of Corporate Insolvency Resolution Process (CIRP), approval of Resolution Plan by NCLT, disposal of appeal based on NCLT order.

Disallowance of Cenvat Credit:
The appeal was filed against the disallowance of cenvat credit of service tax amounting to Rs.88,84,632 for the period February 2011 and March 2011. The original authority had ordered the recovery of the disallowed amount along with interest and imposed a penalty under the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

Corporate Insolvency Resolution Process (CIRP):
The appellant's counsel informed that the CIRP was initiated for the appellant under the Insolvency and Bankruptcy Code, 2016. The CIRP was completed, and the Resolution Plan submitted by a consortium was approved by the NCLT. The counsel requested that the Resolution Plan be considered in disposing of the appeal.

Approval of Resolution Plan by NCLT:
The appellant presented the NCLT's order approving the Resolution Plan submitted by the consortium. The order specified the allocation of Rs.25 crores towards statutory dues owed to Government Authorities, extinguishing all claims or liabilities prior to the Effective Date or upon acquisition of control by the Resolution Applicant.

Disposal of Appeal based on NCLT Order:
Based on the NCLT's order and the Resolution Plan approval, the appeal filed by the appellant, Ruchi Soya Industries Limited, was disposed of accordingly. The decision was pronounced in open court on 06.04.2023.