Appeals filed by company under insolvency proceedings abate under Rule 22 when Resolution Plan approved under IBC

CESTAT Kolkata held that appeals filed by a company under insolvency proceedings abate under Rule 22 of CESTAT (Procedure) Rules, 1982 when a Resolution Plan is approved under the Insolvency and Bankruptcy Code, 2016. The tribunal ruled it becomes functus officio upon abatement, lacking power to order refund of pre-deposits made under Section 35F of Central Excise Act, 1944. The original corporate debtor effectively ceases to exist from the NCLT order date, with all sub-judice claims extinguished under the Resolution Plan. Appeals were disposed of as abated.

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Issues Involved:

1. Availment and denial of CENVAT Credit on inputs/capital goods.
2. Impact of Corporate Insolvency Resolution Process (CIRP) on pending appeals.
3. Application of Rule 22 of the CESTAT (Procedure) Rules, 1982 regarding abatement of appeals.
4. Refund of pre-deposit in cases where appeals abate due to insolvency proceedings.

Detailed Analysis:

1. Availment and Denial of CENVAT Credit:

The appeals were filed by the appellant company challenging the denial of CENVAT Credit on inputs and capital goods by the Commissioner through various Orders-in-Original. The Revenue filed cross-appeals where CENVAT Credit was allowed. The Tribunal noted that penalties were waived during the stay petition hearings as the appellant had reversed the CENVAT Credit involved.

2. Impact of CIRP on Pending Appeals:

During the pendency of the appeals, insolvency proceedings were initiated against the appellant company under the Insolvency and Bankruptcy Code, 2016, leading to the approval of a Resolution Plan by the NCLT. The Tribunal recognized that the CIRP, culminating in the Resolution Plan, governed the rights and liabilities of the appellant company, effectively altering the legal landscape of the appeals.

3. Application of Rule 22 of the CESTAT (Procedure) Rules, 1982:

The Tribunal held that the appeals abated under Rule 22 of the CESTAT (Procedure) Rules, 1982, as no application for continuance was filed by the successor-in-interest post-insolvency proceedings. Rule 22 stipulates that proceedings abate unless continued by a successor or legal representative. The Tribunal emphasized that the appeals ceased to exist, having been rendered infructuous due to the insolvency proceedings and the approved Resolution Plan.

4. Refund of Pre-deposit:

The appellant sought a refund of the pre-deposit made during the appeal process, arguing it was a security deposit, not a tax or duty. The Tribunal, however, found itself functus officio, unable to issue directions for refund post-abatement of the appeals. It referred to the Supreme Court's decision in Ruchi Soya Industries Ltd. v. Union of India, which directed refund in a different context, but distinguished the present case due to the statutory abatement under Rule 22.

The Tribunal concluded that the appeals abated with the approval of the Resolution Plan, and it had no jurisdiction to order a refund of the pre-deposit. The Tribunal's role was limited to acknowledging the abatement, and any further claims, including the refund of pre-deposit, were outside its purview due to the statutory framework governing insolvency proceedings.

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