Excise Dues Extinguished Under Approved Resolution Plan: CESTAT Rejects Revenue’s Recovery Appeal Against Bhatia Coke Energy Limited [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that excise dues not included in an approved insolvency resolution plan stand extinguished and no recovery proceedings can be continued against the corporate debtor.

Bhatia Coke Energy Limited, the appellant, was subjected to excise duty demands under an Order-in-Original passed by the Commissioner of Central Excise in 2017. Subsequently, insolvency proceedings were initiated under the Insolvency and Bankruptcy Code, 2016, and the National Company Law Tribunal (NCLT) approved a resolution plan for the company on 20.06.2022.

During the pendency of appeals before the CESTAT, the appellant submitted a copy of the NCLT’s order approving the resolution plan and argued that in view of the Supreme Court’s decision in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [2021 (9) SCC 657], all claims and dues not forming part of the approved resolution plan stand extinguished.

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The appellant's counsel argued that once the plan is approved, no further recovery can be made by any government authority for prior dues.

The revenue argued that the excise demands were validly confirmed and sought to continue with the recovery, but did not dispute the existence or approval of the resolution plan.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that in Ghanashyam Mishra case, the Supreme Court had clearly held that once a resolution plan is approved under Section 31(1) of the Insolvency and Bankruptcy Code, all claims not included in the plan stand extinguished and no recovery proceedings can be initiated or continued.

The tribunal pointed out that the revenue’s claim was not part of the approved resolution plan and hence could not be recovered. The tribunal explained that the resolution plan binds all stakeholders, including the central and state governments, and once approved, it freezes all claims not forming part of the plan.

The tribunal held that the excise demands against Bhatia Coke Energy Limited were not recoverable and dismissed the revenue’s appeal.

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