IMPORTANT POINT
Claims not part of an approved resolution plan under the IBC are extinguished, and appeals cannot abate under Rule 22 when a resolution plan allows for business continuity.

JUDGMENT :

(PER: HON'BLE MR JUSTICE C.M. POONACHA)

The present appeal is filed by the assessee under Section 35G of the Central Excise Act, 1944[Hereinafter referred to as ‘Act of 1944’] challenging the Final Order No.21234/2023 dated 9.11.2003 passed in Excise Appeal No.25387/2013 by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore[Hereinafter referred to as ‘CESTAT’].

2. The facts in brief leading to the present appeal are that the assessee (originally known as Ruchi Soya Industries Limited) is engaged in the manufacture of Edible Refined Oils and having its factory at Baikampady Industrial Area, Mangaluru. Consequent to the show cause notice dated 26.3.2012 issued by the respondent, Order-in-Original was passed on 2.11.2012 and issued on 8.11.2012, wherein the Commissioner of Central Excise and Sale Tax, Mangaluru, Hereinafter referred to as ‘Commissioner’, ordered, inter alia, that an amount of Rs.8,06,44,997/-being the Central Excise Duty on “RBD Palm Stearin” manufactured and removed, during the period 14.7.2009 to 26.8.2011 was confirmed. An amount of Rs.2,97,29,891/-paid by the assessee was appropriated against the said demand and the remaining duty of Rs.5,09,15,106/-was demanded. The assessee preferred an appeal in Excise Appeal No.25387/2013 challenging the demand of Rs.5,09,15,106/-passed vide the said order in original before the CESTAT.

3. During the pendency of the appeal, an order dated 8.12.2017/15.12.2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016[Hereinafter referred to as ‘IBC’] was passed by the National Company Law Tribunal, Mumbai Bench[Hereinafter referred to as ‘NCLT’] in CP No.1371-1372/I&BP/NCLT/MAH/2017, whereunder the NCLT ordered commencement of Corporate Insolvency Resolution Process[Hereinafter referred to as ‘CIRP’] against Ruchi Soya Industries Ltd.,[Hereinafter referred to as ‘Ruchi Soya’] and an Interim Resolution Professional[Hereinafter referred to as ‘IRP’] was appointed to carry out the functions as per the IBC. Pursuant to the said order dated 8.12.2017, a public announcement was issued on 21.12.2017. Thereafter, the NCLT, vide order 24.7.2019 passed in MA No.1721/2019 and other connected matters, accepted the modified resolution plan and approved the same, consequent to which change in control of the assessee has taken place and the name of Ruchi Soya was changed to Patanjali Foods Limited[Hereinafter referred to as ‘Patanjali’] as is forthcoming from the Certificate dated 24.6.2022 issued by the office of the Registrar of Companies, Mumbai.

4. The assessee namely, Patanjali filed Miscellaneous Applications before the CESTAT placing on record the subsequent events of the CIRP of Ruchi Soya. It was further contended vide the said Miscellaneous Applications, inter alia, that the demand for the period July 2007 to August 2011 in relation to the assessee has stood extinguished since no claim was filed by the revenue before the IRP. The said application was opposed by the revenue before the CESTAT contending that consequent to the approval of the resolution plan by the NCLT, the appeal filed by the assessee has been abated as per Rule 22 of the CESTAT (Procedure) Rules, 1982[Hereinafter referred to as ‘1982 Rules’] and the Tribunal becomes functus officio. The CESTAT by its order dated 9.11.2023 held that the appeal of the assessee has abated as per Rule 22 of the 1982 Rules. Being aggrieved, the present appeal is filed.

5. This Court by order dated 2.9.2024 admitted the above appeal to consider the following substantial question of law:

“A) Whether the Appellate Tribunal erred in law as well as on facts while not following the law laid down, amongst others, by the Hon’ble Supreme Court that with respect to demand(s) for which no claims were submitted and which were not part of the approved Resolution Plan, as in present case, all the dues relating to the same stand extinguished and no proceedings in respect of such dues can be continued?”

6. Heard the submissions