TaxTMI 
TaxTMI 
2023 (12) TMI 1015
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....UDGMENT ( Virtual Mode ) [ Per: Shreesha Merla, Member (Technical) ] 1. Aggrieved by the Impugned Order dated 23.08.2023, passed in I.A. No. 1471/2022 in CP (IB) No. 492/7/HDB/2019, the Appellant Banks preferred this Appeal, by which Impugned Order, the Adjudicating Authority has, while dismissing the Application, observed as follows : Decision on the Application: First of all, it is essential to recognize that a Bank Guarantee inherently serves as a mechanism to protect the interests of its recipient. The party providing the Guarantee assures the recipient of their financial stability and credibility. From the standpoint of banks or financial institutions issuing the guarantee, their primary interest lies in earn....
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.... 2. Learned Senior Counsel Mr. P.L. Narayanan appearing for the Appellants submitted that the First Appellant, IDBI Bank, representing the other banks submits that the renewal of the Bank Guarantees is essential to avoid invocation of liability and would also be useful for the Resolution Applicants who acquire the Corporate Debtor as a 'Going Concern' together with all the rights, and after obtaining MPP status, they would get total exemption from payment of Customs Duty, thereby, improving the turnaround chances of the Corporate Debtor Company (KMPCL). Therefore, appropriate directions for renewal of Bank Guarantees are required to be issued to the Resolution Professional to safeguard the interests of the Stakeholders as well as the Corpo....
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.... advantage to the Corporate Debtor to have the Bank Guarantee renewed and continued, as opposed to discontinuing the Bank Guarantees which will nullify not only the current Custom duty exemption but also pull back the earlier custom duty exemption resulting in enormous loss to the Corporate Debtor, the scales will tilt in favour of continuing the Bank Guarantees so as to avoid the imposition of penalty and withdrawal of custom duty exemption. It is further submitted that the Respondent failed to consider the fact that the present custom Bank Guarantee liability (- Rs.6,00,00,00,000) for KSK Mahanadi Power Company Ltd., is contingent liability, in case these custom Bank Guarantee are not renewed by lenders, the Custom Department may invoke t....
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.... Guarantees will not affect the 'Going Concern' nature of KMPCL. 6. It is strenuously argued by the Learned Counsel for the Respondent that the Second unit is fully commissioned but is not eligible for complete MPP status as per the guidelines of the Ministry of Power. Unit 5 is not operational and the goods pertaining to Unit 5 are still lying with Paradip Port Authority for the last 6 years since 2017. Unit No. 5 received only partial MPP status and cannot be changed to confirm the MPP status during the CIRP of KMPCL in view of the present circumstances. It is also submitted that as the Customs Department has filed a claim before the RP with respect to financial liability on Customs Duty incurred by KMPCL. The CoC has discussed all the....
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....tatus 5 Not operational Partial MPP status 6 Not operational Partial MPP status 9. From the aforenoted table, it is clear that Units 1, 2, 5 & 6 are only having partial MPP status. It is an admitted fact that the MPP status is important since it provides an exemption of Customs Duty. We find force in the contention of the Learned Counsel for the Respondent that since there are no goods being imported by KMPCL or its contractor, being SEPCO, from China during the CIRP of KMPCL, for the operationalisation of the units of KMPCL, there is no exemption which KMPCL can claim for customs duty liability and therefore, the Respondent has intimated the CoC that these renewals are not necessary for the 'Going Concern' nature of KM....