2023 (10) TMI 899 - AT - Customs

Confiscation of certain goods - imposition of redemption fine - penalty under Section 112(a) of the Customs Act - liability and claims pertaining to (ESIL) after approval of the Resolution Plan - HELD THAT - The original case was booked against (ESIL) Essar Steel India Ltd. During the pendency of this case (ESIL) Essar Steel India Ltd underwent Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 (IBC). The appellants were earlier known as Essar Steel India Ltd (ESIL). The appellant had imported certain scrap and paid duty thereon. However, later on, it was found that there was an excess of 1300 MTS as against declared quantity of 29307.318 metric tons. The said goods were confiscated under Section 111(m) of the Customs Act, and redemption fine of Rs.16.5 Lakhs, penalty of Rs. 3.5 Lakhs was imposed by original adjudicating authority under Section 112(a) of the Customs Act. The matter was challenged before the Commissioner (Appeals), and the Commissioner (Appeals) reduced the redemption fine from 16.5 to 5 Lakhs, and penalty from Rs. 3.5 Lakh to Rs. 1 Lakhs. In a similar situation in appellants own case, Tribunal in ARCELOR MITTAL NIPPON STEEL INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I 2023 (7) TMI 1303 - CESTAT AHMEDABAD has observed that resolution plan has been approved by NCLT vide order dated 08.03.2019 according to which any government dues as on date of the NCLT order stand extinguished. In this position, we are of the view that the present appeal is liable to be disposed of as infructuous. The appeal becomes infructuous and the same is dismissed as infructuous - Appeal disposed off.

Summary

Issues involved:
The appeal against confiscation of goods and imposition of redemption fine and penalty under Section 112(a) of the Customs Act.

Details of the Judgment:

Issue 1: Confiscation of Goods and Imposition of Redemption Fine and Penalty
The appellant, formerly known as Essar Steel India Ltd (ESIL), imported scrap with an excess quantity of 1300 MTS compared to the declared amount. The goods were confiscated under Section 111(m) of the Customs Act, with a redemption fine of Rs.16.5 Lakhs and a penalty of Rs. 3.5 Lakhs imposed. The Commissioner (Appeals) later reduced the redemption fine to Rs. 5 Lakhs and the penalty to Rs. 1 Lakh. The appellant argued that due to Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, all claims prior to the effective date of management takeover were extinguished as per the approved resolution plan. The Tribunal found a similar situation in the appellant's own case where government dues were extinguished upon NCLT approval, leading to the dismissal of the appeal as infructuous.

Issue 2: Corporate Insolvency Resolution Process (CIRP) and Extinguishment of Liabilities
The appellant underwent CIRP, and the resolution plan approved by NCLT extinguished all liabilities and claims prior to the effective date of management takeover. The Tribunal observed that as per the approved resolution plan, all liability and claims pertaining to ESIL that arose before the effective date shall stand extinguished, settled, abated, and satisfied. The Tribunal referred to a previous case where government dues were extinguished upon NCLT approval, leading to the dismissal of the present appeal as infructuous.

Conclusion:
Considering the extinguishment of liabilities and claims under the approved resolution plan due to CIRP, the Tribunal found the appeal to be infructuous and dismissed it accordingly. The appeal was disposed of based on the above terms.