2025 (2) TMI 619 - AT - Central Excise

Abatement of appeal - Recovery of CENVAT Credit - process amounting to manufacture or not - process of culling HR/CR Coils of iron or non-alloys steel into sheets or slitting into strips of lesser width or slitting of sheets into strips - HELD THAT - It is found that during the pendency of this appeal before this Tribunal one operational creditor M/s S.K. Unit Print Pvt Ltd filed an application under Section 9 of IBC 2016 before the NCLT in order to initiate CIRP against the Corporate Debtor i.e. appellant in this case which culminated into liquidation proceedings vide order dated 31.03.2023 passed by the NCLT Chandigarh. It is also noted that Shri Sanjay Kumar Dewani was appointed as the liquidator who after following the due process as prescribed under Liquidation Process Regulations 2016 and realized all the assets of the Corporate Debtor and distributed the same amongst the stakeholders in accordance with the said Regulations as mentioned in the order passed by the NCLT Chandigarh. As the appellant has been finally liquidated by the NCLT vide its order dated 04.06.2024 therefore in view of the Rule 22 of the CESTAT (Procedure) Rules 1982 the present proceedings against the appellant cannot continue. Conclusion - The appeal abated due to the dissolution of the appellant by the NCLT in accordance with Rule 22 of the CESTAT (Procedure) Rules 1982. The present appeal abates and is accordingly disposed of.

Summary

The present appeal before the Appellate Tribunal CESTAT Chandigarh involved a dispute concerning the recovery of Cenvat Credit amounting to Rs.73,40,947 under the Cenvat Credit Rules, 2004. The Commissioner of Central Excise, Delhi-III had confirmed the demand, interest, and penalty against the appellant, M/s ADI Automotives Pvt Ltd, for inadmissible Cenvat Credit based on purchases from M/s Asian Color Coated Ispat Ltd. The appellant was engaged in the manufacture of M.V. Parts and Sheet Metal components and availed Cenvat Credit under the rules. The issue arose from the fact that the process carried out by M/s Asian Color Coated Ispat Ltd did not amount to "manufacture" as per the Central Excise Act, thus rendering the Cenvat Credit inadmissible to the purchasing parties.During the pendency of the appeal, insolvency proceedings were initiated against the appellant, leading to liquidation. The National Company Law Tribunal (NCLT) ordered the dissolution of the appellant, and the liquidator completed the liquidation process, distributing assets among stakeholders. The Revenue also filed a claim before the liquidator for the confirmed demand against the appellant.The Tribunal noted the Rule 22 of the CESTAT (Procedure) Rules, 1982, which states that proceedings shall abate upon the death, insolvency, or winding up of a party unless continued by the successor-in-interest or legal representative within a specified period. Considering the dissolution of the appellant by the NCLT, the Tribunal held that the proceedings could not continue as the appellant no longer existed.Referring to precedents, including the case of Ruchi Soya Industries Ltd vs. CCE & ST, Mangalore, the Tribunal emphasized that once a company is dissolved, the appeal abates, and the Tribunal loses jurisdiction over the matter. The Tribunal highlighted the binding nature of the NCLT's decision and the need for the successor-in-interest to seek continuation of proceedings. The Tribunal also cited judgments from various benches supporting the abatement of appeals in similar circumstances.In light of the analysis, the Tribunal concluded that the present appeal abated due to the dissolution of the appellant and disposed of the matter accordingly.The Tribunal's decision was based on the legal framework provided by the Cenvat Credit Rules, 2004, the Central Excise Act, 1944, the Insolvency and Bankruptcy Code, 2016, and the CESTAT (Procedure) Rules, 1982. The Tribunal's interpretation and reasoning focused on the abatement of proceedings following the dissolution of the appellant by the NCLT, in line with established legal principles and precedents.The key evidence considered was the order of the NCLT and the liquidation process undertaken by the appointed liquidator. The Tribunal applied the law to the facts by analyzing the implications of the appellant's dissolution on the continuation of the appeal proceedings. Competing arguments were not presented in this case, as the dissolution of the appellant was a decisive factor leading to the abatement of the appeal.In conclusion, the Tribunal held that the appeal abated due to the dissolution of the appellant by the NCLT, in accordance with Rule 22 of the CESTAT (Procedure) Rules, 1982, and consistent with established legal principles and precedents. The core principle established was that once a company is dissolved, appeal proceedings before the Tribunal cease to exist, and the Tribunal lacks jurisdiction to continue the matter.