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2024 (6) TMI 1011 - AT - CustomsContinuation of appeal after initiation of Corporate Insolvency Resolution Process (CIRP) and Order approving the Resolution plan passed/approved by the Learned NCLT under Insolvency and Bankruptcy Code, 2016 - relief under changed circumstances - Rule 22 of CESTAT (Procedure) Rules, 1982 - HELD THAT - Undisputedly, during the pendency of the said Appeals, pursuant to the petition filed by one M/s Elite Brilliant Limited, proceeding has been initiated under IBC, 2016. The Hon ble NCLT vide Order dated 16.04.2019 admitting the petition appointed the Interim Resolution Professional (IRP) in the case. The Resolution Plan has been approved by the Hon ble NCLT vide Order dated 13.01.2020. Consequent to the said Order approving the Resolution Plan, the appellant is now before this Forum. The Mumbai bench of this Tribunal in the case of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL 2022 (10) TMI 801 - CESTAT MUMBAI analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and the case laws on the issue including those cited by the Ld. Advocate for the appellant observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. As observed by the Hon ble Supreme Court and High Courts in catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute, while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law. Thus, the appeal abates once the IRP is appointed and/or Resolution plan approved. Consequently, the appeals abate as per Rule 22 of CESTAT (Procedure) Rules, 1982 and this is the relief/Order could be passed as prescribed under the said Rule.
Issues Involved:
The appeal against Order-in-Original No. 15/2014-Commr. dated 23.04.2014 passed by the Commissioner of Customs, Mangalore; Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC, 2016) filed by M/s Elite Brilliant Limited; Whether the Appeals continue after initiation of Corporate Insolvency Resolution Process (CIRP) and Order approving the Resolution plan passed/approved by the Learned NCLT under Insolvency and Bankruptcy Code, 2016; Relief claimed under changed circumstances. Issue 1: Mis-declaration of quantity and value of exported iron ore fines The appellant exported iron ore fines and was alleged to have mis-declared the quantity and value of goods. After investigation, a show-cause notice was issued, resulting in a total demand of Rs.4,29,79,199/- along with penalties imposed under various provisions of the Customs Act, 1962. The appellant challenged this order before the Tribunal. Issue 2: Application under IBC, 2016 and Resolution Plan approval During the appeal process, M/s Elite Brilliant Limited filed an application under Section 9 of IBC, 2016 against the appellant as Corporate Debtor. The National Company Law Tribunal (NCLT), Bangalore approved the Resolution Plan under Section 31(1) of the IBC, 2016. The appellant claimed that a settlement amount had been allocated towards customs duty, extinguishing part of the demand. Issue 3: Abatement of Appeals post Resolution Plan approval The Revenue argued that once the Resolution Plan is approved by the NCLT, the appeals stand abated as per Rule 22 of CESTAT Procedure Rules, 1982, making the Tribunal functus officio. Citing various case laws, the Revenue contended that the Tribunal cannot continue proceedings after the Resolution Plan approval. In the present case, the appellant faced allegations of mis-declaration regarding the exported iron ore fines, leading to a significant demand and penalties under the Customs Act, 1962. Subsequently, an application under the IBC, 2016 was filed by M/s Elite Brilliant Limited, resulting in the approval of a Resolution Plan by the NCLT. The key question before the Tribunal was whether the appeals could continue post the Resolution Plan approval and if the relief claimed by the appellant was permissible under the changed circumstances. The Tribunal analyzed Rule 22 of CESTAT Procedure Rules, 1982, which states that proceedings abate upon the approval of a Resolution Plan by the NCLT unless an application for continuation is made by the successor-in-interest within a specified period. The Mumbai bench's decision emphasized the applicability of this rule once a successor interest with sufficient rights is appointed by the NCLT. As no such application was made in this case, the appeals were deemed to have abated. The Revenue's argument, supported by case laws, highlighted that the Tribunal's jurisdiction ceases upon the approval of the Resolution Plan, rendering the appeals non-maintainable. The Tribunal concurred with this view, stating that the appeals abate as per Rule 22 of CESTAT Procedure Rules, 1982, after the Resolution Plan approval by the NCLT. Therefore, the relief sought by the appellant was not granted, as the Tribunal's powers are limited by the statutory framework. In conclusion, the Tribunal upheld the abatement of the appeals post the Resolution Plan approval, in line with Rule 22 of CESTAT Procedure Rules, 1982, and the established legal precedents. The Tribunal's decision was guided by the statutory limitations on its powers and the binding nature of the Resolution Plan approved by the NCLT.
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