CESTAT dismisses appeal as abated after NCLT approves Resolution Plan, tribunal becomes functus officio

CESTAT Chandigarh disposed of an appeal as abated following approval of a Resolution Plan by NCLT. The tribunal held it became functus officio after NCLT's approval, citing precedents from Mumbai and Hyderabad benches in similar cases involving recovery of CENVAT Credit with interest and penalties. The appeal concerning tax recovery was rendered moot once the corporate insolvency resolution process concluded with NCLT's sanction of the resolution plan.

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Issues involved:
The issues involved in the judgment are the disallowance of Cenvat Credit, recovery of the disallowed amount along with interest, imposition of penalties under the Cenvat Credit Rules, and the abatement of the appeal due to the approval of the Resolution Plan by the NCLT.

Disallowance of Cenvat Credit and Recovery:
The Commissioner disallowed Cenvat Credit under Rule 14 of the Cenvat Credit Rules, 2004, u/s 11 A of the Central Excise Act, 1944, and ordered the recovery of the disallowed amount along with interest u/s 11AB of the Act. Another disallowance was made under the same provisions for a different amount, with an order for recovery along with interest u/s 11 AB (now 11AA) of the Act. Penalties were imposed under Rule 15 of the Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1944.

Abatement of Appeal due to Resolution Plan Approval:
The appellant's financial difficulties led to the initiation of Corporate Insolvency Resolution Process (CIRP) against the appellant's company. The NCLT approved the Resolution Plan, which became effective on a specified date. The Tribunal considered the Resolution Plan and found similar matters had been considered by other benches. The Tribunal referred to a relevant Supreme Court decision and a CBIC instruction regarding the binding nature of approved Resolution Plans on creditors, extinguishing claims not part of the plan. The Tribunal noted that once a Resolution Plan is approved, the appeal stands abated, and the Tribunal becomes functus officio in the matter.

Conclusion:
In line with the decision of a Co-ordinate Bench and the Supreme Court judgment, the Tribunal held that the appeal abates due to the approval of the Resolution Plan by the NCLT. The Tribunal found that it had become functus officio in matters relating to the appeal and disposed of the appeal as abated.

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