2023 (11) TMI 417 - AT - Central Excise

Continuation/abatement of appeal - continuation 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 - HELD THAT - Undisputedly, during the pendency of the said Appeals, pursuant to the petition filed by one M/s Bharat Steel Industries, Hyderabad, proceeding has been initiated under IBC, 2016. The Hon ble NCLT vide Order dated 19.07.2017 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 13.04.2018. 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. Thus, as observed by the Hon ble Supreme Court and High Courts in a 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. The view consistently expressed by this Tribunal in a series of cases that the appeal abates once the IRP is appointed and/or Resolution plan approved - the appeals abate as per Rule 22 of CESTAT (Procedure) Rules, 1982.

Summary

Issues Involved:
Appeal against demand of CENVAT Credit and Excise Duty, impact of Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 on the appeals.

CENVAT Credit Appeal:
The appellant, engaged in manufacturing sponge iron and steel, availed CENVAT Credit on 'inputs' like MS Angles, Channels, Joists, Plates for construction of the factory. Show cause notice issued for recovery of wrongly availed credit, confirmed on adjudication with interest and penalty imposed. Amount deposited during investigation was also appropriated.

Excise Duty Appeal:
Demand of Excise Duty issued for alleged clandestine manufacture and clearance of goods without payment. Show cause notice for recovery of duty with interest and penalty confirmed. A portion of the demanded amount was appropriated from the deposit made during investigation.

Impact of CIRP on Appeals:
During the pendency of the appeals, Corporate Insolvency Resolution Process (CIRP) was initiated against the appellant. National Company Law Tribunal (NCLT) approved the Resolution Plan under the Insolvency and Bankruptcy Code, 2016. The question arises whether the appeals continue post-approval of the Resolution Plan and if relief can be granted under the changed circumstances.

Legal Analysis:
The Tribunal examined Rule 22 of CESTAT (Procedure) Rules, 1982, which states that proceedings abate upon death, insolvency, or winding up of a party unless continued by the successor-in-interest. The Tribunal, in line with previous decisions, held that once the Resolution Plan is approved by NCLT, the appeals abate. The Tribunal emphasized that it cannot go beyond its statutory powers and pass orders beyond what is allowed by the rules.

Judicial Precedents:
The judgments cited by the appellant's advocate were found inapplicable to the present case. The Tribunal differentiated cases where relief was granted post-NCLT approval from the current scenario where appeals abate upon such approval. The Tribunal highlighted that the principle governing circumstances after abatement of appeals under Rule 22 was not discussed in the cited cases, leading to the decision that the appeals abate as per the said rule.

Conclusion:
Considering the consistent view of the Tribunal and the statutory provisions, the appeals were held to abate post-approval of the Resolution Plan by NCLT. The relief/order passed was in accordance with Rule 22 of CESTAT (Procedure) Rules, 1982. The Tribunal pronounced the order on 09.11.2023.