2025 (3) TMI 135 - HC - Customs

Maintainability of petition - availability of alternative remedy - Challenge to an order demanding duty drawback and interest under the Customs Act 1962 and Customs and Central Excise Drawback Rules 2017 - petitioner had undergone a corporate insolvency resolution process (CIRP) and was acquired by QVC Exports Ltd - HELD THAT - In the present case the respondents did not lodge their demand in respect of the duty drawbacks against the petitioner during the CIRP. Admittedly the claim of the respondents is not a part of the approved resolution plan. It is therefore abundantly clear that a claim brought to the fore during the pendency of the moratorium period after the claims have been recorded by the adjudicating authority would stand waived off in terms of Section 31A of the code. It is not inclined to relegate the petitioner to the remedy of an appeal as the case of the petitioner is squarely covered by the decisions of the Hon ble Supreme Court in Ghanashyam 2021 (4) TMI 613 - SUPREME COURT and in the view of the well-settled position of law. Conclusion - Once a resolution plan is approved all claims not part of the plan are waived. The duty drawback demand was raised after the moratorium period during CIRP which precluded such actions. The impugned order demanding duty drawbacks is quashed. Petition allowed.

Summary

The Bombay High Court considered a petition challenging an order demanding duty drawback and interest under the Customs Act, 1962, and Customs and Central Excise Drawback Rules, 2017. The petitioner, a company involved in manufacturing ferroalloys, had undergone a corporate insolvency resolution process (CIRP) and was acquired by QVC Exports Ltd. The Assistant Commissioner of Customs issued an order demanding duty drawbacks from the petitioner, which the petitioner contested.The core legal questions considered were:1. Whether the demand for duty drawbacks made after the approval of the resolution plan by the NCLT was valid?2. Whether the petitioner's liability for duty drawbacks was extinguished upon approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016?3. Whether the petitioner was required to provide evidence of export proceeds realization as per FEMA regulations before the initiation of CIRP?The Court analyzed the contentions of both parties. The respondents argued that the duty drawback demand was a statutory requirement and not affected by the resolution plan approval. They emphasized the petitioner's obligation to provide evidence of export proceeds realization, which was not fulfilled. The petitioner, on the other hand, asserted that the resolution plan approval waived all liabilities, including duty drawbacks, and that the demand was invalid post-resolution plan approval.The Court referred to the Supreme Court's decisions in Ghanshyam Mishra and Essar Steel cases, which established that claims not part of the resolution plan stand extinguished upon plan approval. It held that once a resolution plan is approved, all claims not part of the plan are waived. The Court also noted that the duty drawback demand was raised after the moratorium period during CIRP, which precluded such actions.In conclusion, the Court quashed the impugned order demanding duty drawbacks, citing the well-settled legal principles established by the Supreme Court. The petition was allowed, and the Court made no order as to costs.This judgment clarifies the impact of resolution plan approval on liabilities, emphasizing that claims not included in the plan are extinguished. It also underscores the importance of adhering to statutory obligations, such as providing evidence of export proceeds realization.