APRIL 09, 2024

By S K Rahman, IRS, working as AR at Delhi CESTAT

THE CESTAT has passed Interim Order no. 63-68/2024 dated 02.04.2024 2024-TIOL-347-CESTAT-DEL in the case of Hind Agro Industries Ltd., Dr. Naseem Qureshi, Kaleem Khan Nisar Ahmed, Mazhar and Anil Vanjani vs Commissioner of Customs (Prev), Delhi on the issue of hearings and deciding the appeals before Hon'ble CESTAT after commencement of Corporate Insolvency Resolution Process (CIRP) by National Company Law Tribunal, Allahabad (NCLT).

2 In these cases, there were 6 appeals namely Hind Agro Industries Ltd., Vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52892 OF 2019; Dr. Naseem Qureshi, Vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52887 OF 2019; Kaleem Khan Vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52888 OF 2019; Nisar Ahmed, Vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52889 OF 2019; Mazhar Vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52890 OF 2019 and Anil Vanjani vs Commissioner of Customs (Prev), Delhi CUSTOMS APPEAL NO. 52891 OF 2019 = 2024-TIOL-347-CESTAT-DEL pending before Hon'ble CESTAT all arising out of one Order-in-Appeal No. CC(A)/CUS/D-II/Prev/NCH/555-560/2019-20 dated 03.07.2019 passed by the Commissioner of Customs (Appeals), New Delhi.

3. When these cases came up for hearing on 12-01-2024, the learned counsel for the appellant has raised a preliminary objection before the Hon'ble CESTAT that in view of the provisions of section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC 2016), the Tribunal would now not have the jurisdiction to hear the appeals. He has stated that in these cases the National Company Law Tribunal, Allahabad (NCLT) ordered commencement of Corporate Insolvency Resolution Process (CIRP) of the appellant on 03.03.2023. The proceedings have been initiated by the Bank under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC 2016) initiating CIRP and Resolution Professional (RP) has been appointed.

4. The Authorized Representative appearing for the Department has stated that mere pendency of the proceedings before the NCLT would not come in the way of the Tribunal from hearing the appeals on merits. Learned authorized representative also submitted that even if a moratorium is declared under section 14 of the 2016 Code, the Tribunal can still hear the appeals.

5. The Hon'ble CESTAT has relied upon judgement dt 26-10-2023 of the Hon'ble High Court of Kerala in WP(C) NO. 7997 OF 2023 filed by Platino Classic Motors India Pvt. Ltd - 2024-TIOLCORP-27-HC-KERALA-IBC wherein it was held that (ref para 5 of the Order) the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution, once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings. Thus the Hon'ble CESTAT has ordered that the preliminary objection raised by the learned counsel for the appellant that the Tribunal should not continue with the hearing of the appeals is without any merit.

6. Time and again, many appellants have been pleading Hon'ble CESTAT to adjourn the case or to abate the case on the ground that their proceedings are pending before NCLT The implication of such Interim Order no. 63-68/2024 dated 02.04.2024 is that now all Benches of Hon'ble CESTAT would hear the appeals and pass orders irrespective of the fact that CIRP Proceedings are going on.

7. It is to be understood that when financial creditors or operational creditors complain about Corporate Debtor to the National Company Law Tribunal, Allahabad (NCLT), the NCLT orders commencement of Corporate Insolvency Resolution Process (CIRP) of the company. The proceedings are initiated by the Bank under section 7 of Insolvency and Bankruptcy Code, 2016 (IBC 2016) initiating CIRP and Resolution Professional (RP) is appointed. All these are not an obstruction or hinderance for the Hon'ble CESTAT to go ahead, hear the appeals and pass orders. There is only bar on realisation of the confirmed demands by the Revenue or by financial creditors or operational creditors.

8. It may be distinguished from the case law of Bhushan Power and Steel Ltd. Versus Commissioner of Central Excise, Kolkata-IV = 2023-TIOL-348-CESTAT-KOL wherein the Hon'ble CESTAT, Eastern Bench, Kolkata has held that from the date of approval of the Resolution Plan by the NCLAT, the Appeal filed by the Appellant has abated and this Tribunal has become functus officio in the matters relating to this Appeal. In the case of Bhushan Power and Steel Ltd., the Resolution Plan was approved. The cases where CIRP process is going on, the case law of Hind Agro & Ors is applicable.

9. Take away from this Interim Order no. 63-68/2024 dated 02.04.2024 are :

a) There is no bar for finalisation of the assessment and adjudication proceedings by Revenue authorities or appellate authorities or Hon'ble CESTAT after commencement of Corporate Insolvency Resolution Process (CIRP) by National Company Law Tribunal (NCLT)

b) More important is to read this Hon'ble CESTAT Interim Order no. 63-68/2024 dated 02.04.2024 along with the Hon'ble Supreme Court Judgement dt 06-09-2022 in the case Civil Appeal No. 1661 of 2020 State Tax Officer... Vs Ranbow Papers Limited = 2022-TIOLCORP-23-SC-IBC which is reaffirmed by the Hon'ble Supreme Court vide Judgement dt. 31.10.2023 in Review Petition (Civil) No. 1623 of 2023 = 2023-TIOLCORP-18-SC-IBC

10. It is not out of place to mention that the Hon'ble Supreme Court in the case CIVIL APPEAL NO. 1661 OF 2020 STATE TAX OFFICER... VERSUS RAINBOW PAPERS LIMITED vide its Judgement dt 6-09-2022 = 2022-TIOLCORP-23-SC-IBC has held that ( ref para 54-57), the State is a secured creditor; the definition of secured creditor in the IBC does not exclude any Government or Governmental Authority. and further held that delay in filing a claim cannot be the sole ground for rejecting the claim. When Review petitions have been filed against this Order, the same has been upheld of Hon'ble Supreme Court vide its Order dt 31-10-23 = 2023-TIOLCORP-18-SC-IBC as it dismissed the batch of review petitions filed against Judgement dt 6-09-2022.

(The views expressed are personal and not in official capacity)