Commissioner Of Customs And Central ... vs Ashika Commerical Pvt. Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins) No.891 of 2021

IN THE MATTER OF: Commissioner of Customs & Excise - Jaipur-I (Now known as "Principle Commissioner, Central Goods & Service Tax") NCR Building, Statute Circle, C-Scheme, Jaipur (Raj.)-302 005 ...Appellant

Vs.

1.M/s. Ashika Commercial Pvt. Ltd. Through the Resolution Applicant Registered office at 1,Grasting Place, Orbit, 4th floor, Kolkata - 700 001 ...Respondent No.1

2.M/s.Siddha Domicile Company Pvt. Ltd. 12, Park Lane, Kolkata - 700 016 ...Respondent No.2

3. M/s. Himavanta Investors Pvt. Ltd. 12, Park Lane, Kolkata - 700 016 ...Respondent No.3

4.Mr. Rajesh Kumar Agarwal, Resolution Professional 1,GC Avenue, Kolkata - 700 013 ...Respondent No.4

Present: For Appellant : Mr Sandeep Pathak, Mr. Avnish Dave, Advocates. For Respondents : Mr. Vikrant Pachnanda, Ms.Shruti Swaika, Advocate for R1. Mr. Rituraj Choudhary, Mr. Chandan Kumar Advocate for R4

Company Appeal (AT) (Ins) No. 891 of 2021 Page 1 of 13

( 16th December, 2022)

DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

1. The Appellant has filed the present appeal under Section 61 of the

'Insolvency and Bankruptcy Code 2016' (hereinafter referred as to 'the

Code') against the impugned order dated 12.08.2020 passed by the

'National Company Law Tribunal, Kolkata Bench (hereinafter referred as

to 'the Adjudicating Authority') in IA (IB) No. 600/KB/2020 in CP(IB) No.

503/KB/2018.

2. The Appellant /Commissioner of Custom and Excise, Jaipur -I now known

as Principal Commissioner Central Goods and Service Tax Jaipur has

prayed for setting aside the impugned order dated 12.08.2020 passed by

the Adjudicating Authority as also non-provisioning for outstanding

statutory dues of the Corporate Debtor (CD) amounting to

Rs.2,88,53,538/-plus interest at applicable rate in the Resolution Plan etc.

3. The CD/Ashika Commercial Pvt. Ltd had failed to pay excise duty on

manufactured goods in respect of which Cenvat Credit had been availed

by the CD and which had been rejected and returned by the buyer.

4. The ld. Counsel for the Appellant has stated that under the Central Excise

Act, 1944, Central Excise Rules, 2002 and the Cenvat Credit Rules, 2004,

Company Appeal (AT) (Ins) No. 891 of 2021 Page 2 of 13 a manufacturer of excisable goods is entitled to seek Cenvat Credit on

inputs used in the manufacturing of certain goods manufactured and

supplied by such manufacturer. However, in cases where such goods are

rejected or returned by the buyer and are disposed without going through

any manufacturing process, such manufacturer is required to pay excise

duty equal to the amount of Cenvat credit claimed. Since the CD had failed

to pay such excise duty for the period of 2011-12, a show cause notice was

issued to the CD to show cause as to why Central Excise Duty amounting

to Rs. 8,01,407/- along with applicable penalty and interest not be

recovered from the CD. The show cause notice so issued to the CD was

adjudicated vide order in Original dated 30.10.2015 passed by the Joint

Commissioner, Central Excise Department, Jaipur, whereby the demand

of Rs. 8,01,407/- and penalty amount to Rs. 4,31,213/- alongwith interest

at applicable rate was confirmed against the CD. The CD preferred

statutory appeal before the Ld. Commissioner (Appeals) against the OIIO

dated 30.10.2015, which came to be dismissed vide order in appeal dated

07.03.2018. The order in appeal dated 07.03.2018 was challenged by the

CD before the Custom, Excise and Service Tax Tribunal, New Delhi

(CESTAT) which was dismissed by the CESTAT vide its final order dated

28.11.2019. In the meanwhile, during the course of audit of the records of

the CD for the period of 2011-12 to 2015-16 by the officers of the Appellant

Company Appeal (AT) (Ins) No. 891 of 2021 Page 3 of 13 Department, it was discovered that the CD was engaged in clandestine

clearance of finished goods without payment of central excise duty on such

goods in violation of the provision of Central Excise Act, 1944. A show

cause notice dated 03.05.2018 was issued to the CD to show cause as to

why such central excise duty amounting to Rs. 1,38,10,459/- be not

recovered from the CD along with applicable interest and penalty. The

show cause notice dated 03.05.2018 was adjudicated vide order in original

dated 28.02.2019 whereby the Adjudicating Authority was pleased to

confirm the demand of Rs. 1,38,10,459/- and penalty of Rs. 1,38,10,459/-

alongwith interest at applicable rate.

5. The CD was required to pay accordingly, an amount of Rs. 2,88,53,538/-

for violation of various provisions of Central Excise Act, 1944 and relevant

rules made thereunder. It was stated by the Ld. Counsel for the Appellant

that the Adjudicating Authority initiated Corporate Insolvency Resolution

Process (CIRP) vide its order dated 22.08.2019 on an application preferred

under Section 7 of the Code before the Adjudicating Authority by the

Financial Creditors. Mr. Rajesh Kumar Agarwal was appointed as

Resolution Professional (RP) in the first Committee of Creditors (CoC)

meeting. The Ld. Counsel has also stated that the RP invited Expression

of Interest (EoI) and received four EoI from the Resolution Applicant. The

CoC by 100% vote approved the Resolution Plan submitted by Mr.

Company Appeal (AT) (Ins) No. 891 of 2021 Page 4 of 13 Sanwarmal Jain and the same was approved by the Adjudicating Authority

vide impugned order dated 12.08.2020.

6. It was also stated by the Ld. Counsel that in a hearing before ld.

Commissioner (Appeals) on 12.08.2020, the RP of the CD didn't mention

that Resolution Plan has been approved by the Adjudicating Authority.

Similarly, in earlier appearances also before the Departmental Officer, the

RP didn't provide any information regarding CIRP.

7. What has been accepted by the Ld. Counsel of the appellant that they have

not filed the claim when it was invited by the RP and accordingly, there is

no provision of statutory dues of Rs.2,88,53,538/- plus interest anywhere

in the resolution plan and non-provision of statutory debt is a loss to the

public exchequer and hence they have filed the appeal against the

impugned order approving the Resolution Plan.

8. The ld. Counsel for the Respondent no.4/ RP on query from the Bench

that whether any contingent provision exist in the plan. It was informed

by her that plan has already been implemented and no residual is available

in the plan. Hence, nothing can be done. She also stated that only a

vigilant creditor is entitle for payment, however, when the claim was

invited, the agency had not filed its claim and now it simply desires that

its job be done based on correspondence/case file by the RP which is not

the requirement of law so far.

Company Appeal (AT) (Ins) No. 891 of 2021 Page 5 of 13

9. The Respondent No.1/Resolution Applicant/CD has stated in its pleading

that the appeal so filed involves abuse of process of law and not

maintainable. The ld. Counsel for the R1 also stated that the Resolution

plan so approved by the Adjudicating Authority under Section 31 of the

Code warrants no interference. Now the law is settled that the commercial

wisdom rest with the CoC and once the resolution plan is approved

virtually it becomes untouchable. The Appellant has failed to file its claim

when it was invited. The law provides for relief only for those who are

diligent. Through elaborate pleadings, he has tried to justify that nothing

can be done at this stage as they have even not filed its claim even at the

belated stage and now only coming at the stage after the approval of the

Resolution plan not only by the CoC but also by Adjudicating Authority.

10. The ld. Counsel for the R1 also stated that the CD had issued a letter

dated 10.02.2020 to the Superintendent, CGST and Central Excise Range

L1 opposite Central Bank of India, Ajmer road, KishanGarh, which is

depicted as below to supplements its stand that the Appellant was aware

of that CD is under CIRP even in February, 2020 whereas Resolution Plan

by Adjudicating Authority has been approved in August, 2020:

Company Appeal (AT) (Ins) No. 891 of 2021 Page 6 of 13 Company Appeal (AT) (Ins) No. 891 of 2021 Page 7 of 13

11. We heard at length the parties and have carefully gone through the

pleadings of the parties, available material on record, the order of the

Adjudicating Authority and we are having the following observations:

a. It is not in dispute that the Appellant/ Commissioner of Custom and

Excise, Jaipur -I has not filed the claim while it was so notified by the

RP. Even the claim has not been filed at the belated stage prior to

approval of Resolution Plan by the CoC. The Appeal has been filed after

the plan has been approved by the Adjudicating Authority. As a result

of which the Appellant has not complied with the provisions of Section

13 & 15 of the Code.

b. At this belated stage no fund is available out of the kitty of the

Resolution Plan which can be earmarked to the Appellant as informed

by the RP and the Resolution Applicant also. Both Resolution Applicant

and RP has confirmed implementation of the plan and nothing remains

to be adjudicated.

c. It is very much clear that Section 238 of the Code provides very clearly

that provisions of this Code to override other laws as also section 14 of

the Code provides for moratorium during CIRP.

d. We are not in a position even to accede to the request of the Appellant

based on Hon'ble Apex Court Judgment in Civil Appeal No. 1661 of

2020 with Civil Appeal No. 2568 of 2020 State Tax Officer (1) Vs.

Company Appeal (AT) (Ins) No. 891 of 2021 Page 8 of 13 Rainbow Papers Limited1 para 4-10. Even this Judgment has

elaborately dealt with the filing of claims and submission of proof etc.

However, in this case the property of the CD was attached by the

Sales Tax Department prior to initiation of CIRP and as also in this

case Sales Tax Department had already filed a claim before the RP

in the requisite format. Para 4-10 as stated supra is depicted below:

"4.The appellant has, from time to time, been assessed

for Value Added Tax (VAT) and Central Sales Tax (CST)

under the GVAT Act. It is stated that an amount of

Rs.53,71,65,489/- is due from the Respondent to the

Sales Tax authorities towards CST and VAT, as per the

statement enclosed at Page 44 of the Paper Book.

5. On or about 8th July, 2016, recovery proceedings

were initiated against the respondent, in respect of its

dues for the year 2011-2012, and the appellant

attached the property of the respondent being land at

Survey No.2379 and 2381 situated at Rajpur, Taluka

Kadi on 8th October, 2018.

6. One Neeraj Papers Private Limited, as operational

creditor of the respondent, filed Company Petition (IB)

1 2022 Livelaw (SC)743

Company Appeal (AT) (Ins) No. 891 of 2021 Page 9 of 13 No.88 of 2017 under Section 9 of the IBC before

Ahmedabad Bench of the National Company Law

Tribunal (NCLT), for initiation of the Corporate

Insolvency Resolution Process (CIRP) against the

respondent.

7. By an order dated 12th September, 2017, the said

Company Petition [Company Petition (IB) No. 88 of

2017] filed by the said Neeraj Papers Private Limited

was admitted. One George Samuel was appointed

Interim Resolution Professional (IRP) on 22 nd

September, 2017.

8. After appointment of the said George Samuel as IRP,

claims were invited from Creditors under Section 15 of

the IBC by issuance of newspaper publications. The

last date for submission of claims was 5th October

2017.

9. After receipt of claims, a Committee of Creditors (CoC)

was constituted on 10th October 2017. At its first

meeting, the CoC passed a resolution to replace the IRP.

Accordingly, Ramachandra D. Choudhary, a Chartered

Accountant, was appointed as Resolution Professional

Company Appeal (AT) (Ins) No. 891 of 2021 Page 10 of 13 (RP). The appointment of Mr. Choudhary was approved

by the NCLT by an order dated 6th November 2017.

10. The appellant filed a claim before the RP in the

requisite Form B, claiming that Rs.47.36 crores

(approximately), was due and payable by the

respondent to the appellant, towards its dues under the

GVAT Act. The claim was filed beyond time."

Hence this judgment is not in a position to help the Appellant herein

as they have not filed their claim even at belated stage.

e. However, in this context we may also refer to the judgment of

Ghanashyam Mishra and sons Pvt. Ltd. Vs. Edelweiss Reconstruction

company Limited2 held at para 102.1:

"102. In the result, we answer the questions framed by

us as under:

102.1 That once a resolution plan is duly approved by

the Adjudicating Authority under sub section (1)

of Section 31, the claims as provided in the resolution

plan shall stand frozen and will be binding on the

2 (2021) 9 SCC 657

Company Appeal (AT) (Ins) No. 891 of 2021 Page 11 of 13 Corporate Debtor and its employees, members, creditors,

including the Central Government, any State Government

or any local authority, guarantors and other

stakeholders. On the date of approval of resolution plan

by the Adjudicating Authority, all such claims, which are

not a part of resolution plan, shall stand extinguished

and no person will be entitled to initiate or continue any

proceedings in respect to a claim, which is not part of the

resolution plan

102.2. 2019 amendment to Section 31 of the I&B Code is

clarificatory and declaratory in nature and therefore will

be effective from the date on which I&B Code has come

into effect;

102.3Consequently all the dues including the statutory

dues owed to the Central Government, any State

Government or any local authority, if not part of the

resolution plan, shall stand extinguished and no

proceedings in respect of such dues for the period prior

to the date on which the Adjudicating Authority grants its

approval under Section 31 could be continued."

Company Appeal (AT) (Ins) No. 891 of 2021 Page 12 of 13 f. In view of the above stated position of law, we are not in a position to

accede to the prayer of the Appellant and accordingly, the Appeal is

dismissed. No order as to costs.

Pending application, if any, stands disposed of.

[Justice Rakesh Kumar] Member(Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

Raushan

Company Appeal (AT) (Ins) No. 891 of 2021 Page 13 of 13