Appeals automatically abate when Resolution Plan approved under IBC Rule 22 applies

CESTAT Bangalore ruled that appeals abate upon appointment of Interim Resolution Professional (IRP) and approval of Resolution Plan under IBC, 2016. The tribunal held that Rule 22 of CESTAT (Procedure) Rules, 1982 applies when successor interest with sufficient rights is appointed by NCLT. Following precedent from Mumbai bench and SC/HC decisions, CESTAT determined it cannot exceed statutory powers. Appeals automatically abate once CIRP is initiated and Resolution Plan approved, as tribunal is creature of statute bound by express statutory provisions.

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Issues Involved:
Appeal against demand of CENVAT Credit and Excise Duty, impact of Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 on the appeals.

CENVAT Credit Appeal:
The appellant, engaged in manufacturing sponge iron and steel, availed CENVAT Credit on 'inputs' like MS Angles, Channels, Joists, Plates for construction of the factory. Show cause notice issued for recovery of wrongly availed credit, confirmed on adjudication with interest and penalty imposed. Amount deposited during investigation was also appropriated.

Excise Duty Appeal:
Demand of Excise Duty issued for alleged clandestine manufacture and clearance of goods without payment. Show cause notice for recovery of duty with interest and penalty confirmed. A portion of the demanded amount was appropriated from the deposit made during investigation.

Impact of CIRP on Appeals:
During the pendency of the appeals, Corporate Insolvency Resolution Process (CIRP) was initiated against the appellant. National Company Law Tribunal (NCLT) approved the Resolution Plan under the Insolvency and Bankruptcy Code, 2016. The question arises whether the appeals continue post-approval of the Resolution Plan and if relief can be granted under the changed circumstances.

Legal Analysis:
The Tribunal examined Rule 22 of CESTAT (Procedure) Rules, 1982, which states that proceedings abate upon death, insolvency, or winding up of a party unless continued by the successor-in-interest. The Tribunal, in line with previous decisions, held that once the Resolution Plan is approved by NCLT, the appeals abate. The Tribunal emphasized that it cannot go beyond its statutory powers and pass orders beyond what is allowed by the rules.

Judicial Precedents:
The judgments cited by the appellant's advocate were found inapplicable to the present case. The Tribunal differentiated cases where relief was granted post-NCLT approval from the current scenario where appeals abate upon such approval. The Tribunal highlighted that the principle governing circumstances after abatement of appeals under Rule 22 was not discussed in the cited cases, leading to the decision that the appeals abate as per the said rule.

Conclusion:
Considering the consistent view of the Tribunal and the statutory provisions, the appeals were held to abate post-approval of the Resolution Plan by NCLT. The relief/order passed was in accordance with Rule 22 of CESTAT (Procedure) Rules, 1982. The Tribunal pronounced the order on 09.11.2023.

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