IBC Moratorium Inapplicable to Benefiting Debtors; Customs Act Entitles Interest on Delayed Refund

The Tribunal held that the moratorium under Section 14 of IBC does not apply to proceedings benefiting the corporate debtor. Thus, the appeal could proceed during the company resolution process. Regarding entitlement to interest on delayed refund under Section 27A of the Customs Act, the Tribunal ruled in favor of the appellant, granting interest from the date three months after the refund application until the refund date. The impugned order was set aside, allowing the appellant to receive interest on the delayed refund as per the Customs Act, 1962.

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Issues Involved:
1. Applicability of moratorium under Section 14 of IBC during the company resolution process.
2. Entitlement to interest on delayed refund under Section 27A of the Customs Act, 1962.

Summary:

Issue 1: Applicability of Moratorium under Section 14 of IBC

The Tribunal addressed whether the proceedings could continue given the pending company resolution process under IBC before the NCLT. The appellant argued that since the proceedings were in favor of the appellant company, the moratorium under Section 14 of IBC did not apply. The Tribunal referred to the Delhi High Court's order in the case of Power Grid Corporation of India Limited vs. Jyoti Structures Limited, which clarified that the moratorium provision is intended to prohibit debt recovery actions against the assets of the corporate debtor and does not apply to proceedings that benefit the corporate debtor. Therefore, the Tribunal concluded that the appeal could proceed and be disposed of.

Issue 2: Entitlement to Interest on Delayed Refund

The appellant contended that under Section 27A of the Customs Act, 1962, interest is payable if the refund is not granted within three months from the date of the initial application. The appellant had filed for a refund on 22.04.2003, but the refund was only granted on 25.06.2012. The Tribunal noted that the refund was delayed due to litigation and was not granted within the stipulated three months. The Tribunal found that the Commissioner (Appeals) incorrectly interpreted Section 27A by stating that interest was payable only after three months from the order dated 13.04.2012. The Tribunal upheld the appellant's entitlement to interest from 22.07.2003 (three months after the refund application) to 25.06.2012, in line with the Supreme Court's judgment in Ranbaxy Laboratories Ltd.

Conclusion:

The impugned order was set aside, and the appeal was allowed, entitling the appellant to interest on the delayed refund from 22.07.2003 to 25.06.2012 as per the prescribed rate under the Customs Act, 1962.

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