2023 (11) TMI 466 - AT - Central Excise

Continuation of appeal - Resolution Plan is approved by the Hon ble NCLT - HELD THAT - The Mumbai bench of this Tribunal in the case of M/s Alok Industries Ltd s case 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. 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, agreed upon - the appeal abates as per Rule 22 of CESTAT (Procedure) Rules, 1982.

Summary

Issues involved: Classification of RBD Palm Stearin, abatement of appeal post approval of Resolution Plan by NCLT.

Classification Issue:
The appellant, a manufacturer of Edible Refined Oils, faced a show cause notice proposing classification of "RBD Palm Stearin" under sub-heading 38231112 of the Central Excise Tariff Act, 1985. The Commissioner confirmed the classification and imposed duty, interest, and penalty. The appellant, aggrieved by this order, filed an appeal under section 35B of the CEA, 1944.

Abatement Issue:
During the pendency of the appeal, the National Company Law Tribunal (NCLT) approved a Resolution Plan under the Insolvency and Bankruptcy Code, 2016, for the appellant. The appellant contended that the demands for the period in question became infructuous post approval of the Resolution Plan, leading to abatement of the appeal. The appellant argued that the appeal should abate based on precedents such as the case of Ghansyam Mishra Vs. Edelweiss Reconstruction Company Ltd.

Decision on Classification Issue:
The Tribunal analyzed Rule 22 of the CESTAT (Procedure) Rules, 1982, which states that proceedings shall abate unless an application for continuation is made by the successor-in-interest. The Tribunal observed that the rule becomes applicable when the successor interest with sufficient rights is appointed by the NCLT. As no such application was made in this case, the appeal was deemed to have abated.

Decision on Abatement Issue:
The Revenue argued that once the Resolution Plan is approved, appeals stand abated as per Rule 22 of the CESTAT (Procedure) Rules, 1982. The Tribunal, citing various case laws, including M/s Alok Industries Ltd's case, held that the appeals abate from the date of approval of the Resolution Plan by the NCLT. The Tribunal emphasized that it cannot go beyond its statutory powers and that any order passed beyond such powers would be non est in law.

Conclusion:
The Tribunal, in line with consistent precedent, held that the appeal abates once the Resolution Plan is approved by the NCLT. Consequently, the appeal abated as per Rule 22 of the CESTAT (Procedure) Rules, 1982. The Tribunal pronounced the order on this matter on 09/11/2023.