CESTAT Directs CBIC To Issue Guideline In Respect Of IBC Proceedings Initiated Against Assessee Before CESTAT

The Central Board of Indirect Taxes and Customs (CBIC) has been ordered by the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to consider issuing guidelines or procedures for handling cases before the CESTAT in which an IBC proceeding has been brought against the assessee's company.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the department has no proper guidelines as to what stand is to be taken in a case where the IBC proceedings are in progress before NCLT/NCLAT or at a higher forum.

"The assessee against whom the IBC proceedings are initiated invariably approaches the tribunal through miscellaneous application for disposing of the appeals in the light of the NCLT's orders. However, in the absence of any guidelines by the CBIC, the departmental representatives are unaware as to what stand is to be taken in such cases," the CESTAT noted.

The NCLT passed an order approving a resolution plan for the company M/s. Binani Cement Limited in favour of M/s. Ultratech Nathdwara Cement Limited, which is the resolution applicant.

The applicant submitted that, as per the resolution plan approved by NCLT, no dues exist against the applicant. Therefore, since the demand involved in the order was not recoverable by the department, the appeal becomes infructuous.

The applicant submitted that the applicant has not filed an application for continuance of the proceeding in terms of Rule 22 of the CESTAT Procedure Rules, 1982.

The department contended that the appellant became insolvent; therefore, the appeal needs to be abated. If at all, the applicant wishes to continue the proceedings before the tribunal, the application should have been made within a period of 60 days from the date of the declaration of the assessee as insolvent. The assessee has not filed an application; they cannot continue the proceeding before the tribunal.

The CESTAT noted that Rule 22 is applicable only in cases when the assessee is adjudicated as insolvent or in the case of a company when it is wound up. In the present case, the applicant, being a company, has not been wound up; whereas, it was revived under the insolvency resolution process as per NCLT order. Moreover, in the present case, there is only a change of name of the company from M/s. Binani Cement Limited to M/s. Ultratech Nathdwara Cement Limited in terms of the certificate of incorporation pursuant to the change of name issued by RoC. Therefore, the company has not been wound up and it is an on-going company. Hence, rule 22 is not applicable.

"We are of the view that at present the appeal has become infructuous; accordingly, we dismiss the appeal as infructuous. Both the sides have liberty, in case any amicable resolution is not arrived at between the appellant and respondent, to approach this tribunal to revive the present appeal and be decided on merit if required," the CESTAT said.

Case Title: M/S. Ultratech Nathdwara Cement Limited Versus C.C.-JAMNAGAR(PREV)

Citation: Customs Appeal No.45 of 2012

Date: 20.10.2022

Counsel For Appellant: Advocates Gaurav Mathur & Abhishek Shah

Counsel For Respondent: Dharmendra Kanjani

Click Here To Read Order