1 week Ago By Rashida
Sign In Sign Up Top Stories The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that once a resolution plan is approved by the National Company Law Tribunal ( NCLT ), creditors including government authorities cannot recover duty dues that were not included in the approved plan. It dismissed the appeal as such the appeal gets abated under Rule 22 of CESTAT (Procedure) Rules, 1982 and infructuous. The appellants, M/s.
Orchid Healthcare Unit II and M/s. Orchid Pharma Ltd., being a 100% Export Oriented Unit (EOU), procured inputs exempt from excise duty under Notification No.
22/2003-CE dated 31.03.2003 for manufacturing excisable goods.
These inputs were packed in unit containers. Are You GST Compliant? Get the Clarity You Need on RCM – Click here The Department issued Show Cause Notices demanding central excise duty on the clearance of such containers without payment of duty for the periods from April 2014 to March 2015 and January 2015 to September 2015. During the hearing, the appellant submitted that the resolution plan for the corporate debtor had already been approved by the NCLT, Chennai, by order dated 27.
06.2019, under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal noted that the same appellants were earlier granted relief in connected matters through orders passed in February 2024 and February 2025.
It relied on the Supreme Court’s landmark judgment in Ghanashyam Mishra & Sons Pvt. Ltd. v.
Edelweiss Asset Reconstruction Co. Ltd. 2021 , which categorically held that once a resolution plan is approved by the NCLT under Section 31(1) of the IBC, all claims not part of the plan stand extinguished.
This includes claims by the Central Government, State Government, or any local authority. The Tribunal observed that no further proceedings could be continued or initiated for such omitted claims. The tribunal noted that it is not ascertainable whether the Department has registered its claim with the Liquidator as above.
However, now no further proceedings can survive in this appeal. Additionally the bench noted that as the NCLT, Chennai has already accorded its order for Liquidation of approval of the Resolution Plan in respect of the appellant vide its order dated 27.06.
2019 and as application as per Rule 22 has been made by the Official Liquidator appointed by the NCLT for continuance of the appeal, the appeal should abate in terms of the referred Rule. Consequently, the bench of Ajayan T V and Vasa Seshagiri Rao held that the appeals had become infructuous and stood abated under Rule 22, thus affirming the extinguishment of pre-resolution tax claims not included in the approved plan. Support our journalism by subscribing to Taxscan premium .
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