Appeal abated after corporate debtor's liquidation under IBC Section 9 proceedings rendered continuation impossible under Rule 22

CESTAT Chandigarh disposed of an appeal concerning CENVAT credit recovery and manufacturing process determination after the appellant corporate debtor underwent liquidation proceedings. During the appeal's pendency, an operational creditor filed an application under Section 9 of IBC 2016 before NCLT, leading to Corporate Insolvency Resolution Process and subsequent liquidation. NCLT Chandigarh appointed a liquidator who realized and distributed assets among stakeholders following prescribed regulations. The appeal abated under Rule 22 of CESTAT (Procedure) Rules 1982 due to the appellant's dissolution by NCLT order dated 04.06.2024, rendering continuation of proceedings impossible.

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The present appeal before the Appellate Tribunal CESTAT Chandigarh involved a dispute concerning the recovery of Cenvat Credit amounting to Rs.73,40,947 under the Cenvat Credit Rules, 2004. The Commissioner of Central Excise, Delhi-III had confirmed the demand, interest, and penalty against the appellant, M/s ADI Automotives Pvt Ltd, for inadmissible Cenvat Credit based on purchases from M/s Asian Color Coated Ispat Ltd. The appellant was engaged in the manufacture of M.V. Parts and Sheet Metal components and availed Cenvat Credit under the rules. The issue arose from the fact that the process carried out by M/s Asian Color Coated Ispat Ltd did not amount to "manufacture" as per the Central Excise Act, thus rendering the Cenvat Credit inadmissible to the purchasing parties.During the pendency of the appeal, insolvency proceedings were initiated against the appellant, leading to liquidation. The National Company Law Tribunal (NCLT) ordered the dissolution of the appellant, and the liquidator completed the liquidation process, distributing assets among stakeholders. The Revenue also filed a claim before the liquidator for the confirmed demand against the appellant.The Tribunal noted the Rule 22 of the CESTAT (Procedure) Rules, 1982, which states that proceedings shall abate upon the death, insolvency, or winding up of a party unless continued by the successor-in-interest or legal representative within a specified period. Considering the dissolution of the appellant by the NCLT, the Tribunal held that the proceedings could not continue as the appellant no longer existed.Referring to precedents, including the case of Ruchi Soya Industries Ltd vs. CCE & ST, Mangalore, the Tribunal emphasized that once a company is dissolved, the appeal abates, and the Tribunal loses jurisdiction over the matter. The Tribunal highlighted the binding nature of the NCLT's decision and the need for the successor-in-interest to seek continuation of proceedings. The Tribunal also cited judgments from various benches supporting the abatement of appeals in similar circumstances.In light of the analysis, the Tribunal concluded that the present appeal abated due to the dissolution of the appellant and disposed of the matter accordingly.The Tribunal's decision was based on the legal framework provided by the Cenvat Credit Rules, 2004, the Central Excise Act, 1944, the Insolvency and Bankruptcy Code, 2016, and the CESTAT (Procedure) Rules, 1982. The Tribunal's interpretation and reasoning focused on the abatement of proceedings following the dissolution of the appellant by the NCLT, in line with established legal principles and precedents.The key evidence considered was the order of the NCLT and the liquidation process undertaken by the appointed liquidator. The Tribunal applied the law to the facts by analyzing the implications of the appellant's dissolution on the continuation of the appeal proceedings. Competing arguments were not presented in this case, as the dissolution of the appellant was a decisive factor leading to the abatement of the appeal.In conclusion, the Tribunal held that the appeal abated due to the dissolution of the appellant by the NCLT, in accordance with Rule 22 of the CESTAT (Procedure) Rules, 1982, and consistent with established legal principles and precedents. The core principle established was that once a company is dissolved, appeal proceedings before the Tribunal cease to exist, and the Tribunal lacks jurisdiction to continue the matter.

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