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TMI Blog2023 (12) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ewals are not necessary for the Going Concern nature of KMPCL. A perusal of the Minutes of the Meetings dated 14.10.2020, 22.10.2020 and 19.09.2022 of the CoC evidence that the Respondent had informed the Appellants that the renewal of the Customs Bank Guarantees would only increase the financial burden of KMPCL which would have to bear the commission charges and renewal charges which are exorbitant amounts. It is also significant to mention that the Deputy Commissioner, Paradip Customs Division filed a claim dated 04.11.2019 with the IRP / RP of KMPCL stating that an amount of Rs. 7,19,98,48,660.49/- was payable by KMPCL as per the assessment Order. When there is no guarantee with respect to the MPP status of the Non-Operational Units and since there are no goods being imported by the Corporate Debtor Company as it is undergoing CIRP, there is no exemption which the Company can claim for Customs Duty liability and we are of the earnest view that the Corporate Debtor Company need not be burdened with the Commission and renewal charges approximately amounting to Rs. 70 Crores which would only increase the financial burden of the Corporate Debtor Company with no positive bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s capacity to enforce their claim against the Corporate Debtor, potentially requiring them to pursue their claim through the CIRP process, which they have already undertaken. To conclude therefore, u/s 25(1), the Resolution Professional can reject the CoC's proposal for renewal of Bank Guarantees provided by the Corporate Debtor prior to the initiation of CIRP proceedings, as renewing these do not in any way protect and preserve the assets of the Corporate Debtor or support its operations as a going concern. 2. Learned Senior Counsel Mr. P.L. Narayanan appearing for the Appellants submitted that the First Appellant, IDBI Bank, representing the other banks submits that the renewal of the Bank Guarantees is essential to avoid invocation of liability and would also be useful for the Resolution Applicants who acquire the Corporate Debtor as a Going Concern together with all the rights, and after obtaining MPP status, they would get total exemption from payment of Customs Duty, thereby, improving the turnaround chances of the Corporate Debtor Company (KMPCL). Therefore, appropriate directions for renewal of Bank Guarantees are required to be issued to the Resolution Prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lenders and Corporate Debtor's liability will increase to that extent and will affect the Corporate Debtor as a going concern and as well as for obtaining MPP status. 5. Learned Counsel appearing for the Respondent / RP of the Corporate Debtor Company submitted that since only partial MPP status was achieved with respect to Unit Nos. 2 and 5, KMPCL sought for exemption of customs duty for the goods imported with respect to Unit Nos. 2 and 5. This was rejected by the Deputy Commissioner, Paradip Customs Division and an assessment order was passed, making KMPCL liable to pay an amount of INR 7,19,98,660/-. In this regard, the Deputy Commissioner, Paradip Customs Division filed a claim on 04.11.2019 with the IRP/RP of KMPCL. On 14.10.2020, in the Minutes of the Meetings of the CoC of KMPCL, wherein the issue regarding whether the Customs Bank Guarantees should be renewed or not, was discussed and in the CoC meeting held on 19.09.2022, the Respondent reiterated that the issue of renewal of the customs Bank Guarantees was discussed at length in previous CoC meetings and the Respondent had concluded that it is the discretion of the Appellant Banks to renew the customs Bank Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational Partial MPP status 2 Operational Partial MPP status 3 Operational Confirmed MPP status 4 Operational Confirmed MPP status 5 Not operational Partial MPP status 6 Not operational Partial MPP status 9. From the aforenoted table, it is clear that Units 1, 2, 5 6 are only having partial MPP status. It is an admitted fact that the MPP status is important since it provides an exemption of Customs Duty. We find force in the contention of the Learned Counsel for the Respondent that since there are no goods being imported by KMPCL or its contractor, being SEPCO, from China during the CIRP of KMPCL, for the operationalisation of the units of KMPCL, there is no exemption which KMPCL can claim for customs duty liability and therefore, the Respondent has intimated the CoC that these renewals are not necessary for the Going Concern nature of KMPCL. 10. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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