The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appeal before the tribunal should be abated as per Rule 22 of the CESTAT (Procedure) Rules when the National Law Company Law Tribunal (NCLT) approves the resolution plan.
The appellant, Ruchi Soya Industries Ltd, is a manufacturer of Edible Refined Oils falling under Chapter 15 and Fatty Acids under Chapter Heading 3823 of the Central Excise Tariff Act, 1985.
Subsequently, a show-cause notice was sent to the appellant on March 26, 2012, after the investigation was completed. The appellant was accused of clearing RBD Palm Stearin at the “Nil” rate of duty by falsely claiming exemption under Notification No. 3/2006-CE dt. 01.03.2006 as amended.
The proposal called for classifying “RBD Palm Stearin” under sub-heading 38231112 of the Central Excise Tariff Act, 1985, and recovering duty of Rs. 16,02,10,687/- for the period from July 14, 2009, to August 31, 2011, along with interest and a penalty proposal.
Following adjudication, the suggested Chapter Heading 38231112 of CETA, 1985 was confirmed as the classification, and a duty of Rs. 8,06,44,997/- along with an equivalent amount of interest and penalty was confirmed.
Aggrieved by the order of the department, the appellant filed an appeal before the Commissioner (Appeals) who upheld the order of the department. Thus, the appellant filed another appeal before the tribunal.
During the pendency of the appeal, Standard Chartered Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, as the Financial Creditor for initiation of Corporate Insolvency Resolution Process against the appellant as Corporate Debtor, and necessary Orders were passed by the National Company Law Tribunal. Later, the NCLT approved the Resolution Plan and passed an order.
Consequent to the approval of the Resolution Plan, the appellant filed a miscellaneous application before this Tribunal.
Rajesh Rawa, Counsel for the appellant, argued that Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for the continuation of the proceeding.
H. Jayathirtha, appeared for the department arguing that once the Resolution Plan is approved by the NCLT, the appeals stand abated as per Rule 22 of CESTAT (Procedure) Rules, 1982, and the Tribunal becomes functus officio. Therefore, the CESTAT determined that the appeals filed abate as per Rule 22 of the CESTAT Procedure Rules, 1982, with effect from the date of the approval of the resolution plan by the NCLT.
After analyzing the arguments and submission of both parties, the two-member bench of Dr. D. M. Misra, Member (Judicial), and Pullela Nageswara Rao, Member (Technical), observed that the appeal abates once the IRP is appointed and/or the Resolution plan is approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
