National Company Law Appellate Tribunal, New Delhi: Partly allowing the appeal, a bench comprising of Ashok Bhushan*, J., Dr. Alok Srivastava (Technical Member) and Barun Mitra (Technical Member) held that there is no inconsistency between S. 11-B of the Central Excise Act, 1944 and S. 33(5) IBC and the respondent is only entitled for the refund of the amount of Rs.25,46,588/- and not of the amount of Rs.1,08,797/-.
In the instant matter, the Corporate Insolvency Resolution Process (CIRP) proceedings were initiated against the Corporate Debtor, M/s. Apple Industries Ltd and the Adjudicating Authority directed liquidation of the Corporate Debtor.
Liquidator/respondent filed an application before the Adjudicating Authority against the applicant to release/refund the unlawful payment withheld amount Rs. 1,08,797/- and Rs. 25,46,588/- @18% per annum immediately and not to act arbitrarily, support the ongoing Liquidation Proceedings.
The Adjudicating Authority directed the appellant to refund the amounts of Rs.25,46,588/- and Rs.1,08,797/- to the liquidation account of the Corporate Debtor even though the Liquidator has not applied for refund within the statutory period of 1 year as that the provisions of S. 11-B of the Central Excise Act, 1944 are inconsistent with S. 33 of the IBC and by virtue of S. 238 of the IBC, the provisions of IBC will have overriding effect.
Aggrieved by the said order dated 16-09-2022, the appellant filed an appeal challenging the same before this Tribunal.
The appellant contended that there is no inconsistency between S. 33 IBC and S. 11-B of the Central Excise Act, 1944 and the Adjudicating Authority’s interpretation that the provisions of IBC will have overriding effect is not the correct. The appellant contended that the refund was rightly refused by the statutory authority as the application for refund of Rs.25,46,588/- was filed beyond one year and no Application was made by the Liquidator regarding the amount of Rs.1,08,797/-. The appellant further contended that provisions of S. 11B are mandatory and for every refund and the statutory authorities are bound by it. The Adjudicating Authority could not have allowed the refund in disregard to the provisions of S. 11B.
The respondent contended that the liquidator was entitled to a refund as it is the duty of the liquidator to recover and realize all assets and dues of the Corporate Debtor. The respondent also contended that due to COVID-19 suspension of limitation was allowed by order of the Supreme Court and that the provisions of the IBC shall prevail over any other law.
Whether the Application filed by the Liquidator for refund of the amount of Rs.25,46,588/- was filed beyond time?
The Tribunal observed that S. 33(5) IBC states that no suit or other legal proceeding shall be instituted by or against the Corporate Debtor when a liquidation order has been passed, but with the prior approval of the Adjudicating Authority, a suit or other legal proceeding may be instituted by the liquidator on behalf of the Corporate Debtor.
Explaining S. 11-B of the Central Excise Act, 1944, the Tribunal observed that it is an enabling provision which entitles the Corporate Debtor to make an application for refund of duty and becomes operative after liquidation order has been passed to protect the Corporate Debtor from any legal proceeding.
The Tribunal observed that the statutory provision of the Central Excise Act, 1944 does not contemplate automatic refund of any duty to which company may be entitled. Section 11-B of the Central Excise Act, 1944 contemplates a procedure for availing refund and there is no inconsistency between S. 11-B of the Central Excise Act, 1944 and S. 33(5) IBC.
The Tribunal observed that the order in Cognizance for Extension of Limitation, In re, (2020) 9 SCC 468, was passed in exercise of jurisdiction under Art. 142 of the Constitution and the order clearly mentions that “Application” for which limitation is prescribed in special statute will be covered therefore the benefit of the order of the Supreme Court is to be extended to the period of filing of application.
With regards to, no application was filed by the Liquidator for refund of Rs.1,08,797/-, the Tribunal observed that since there is no claim for the refund in accordance with law, the Central Excise department is not obliged to refund the said amount.
Partly allowing the appeal, the Tribunal upheld the direction issued by the Adjudicating Authority for refund of the amount of Rs.25,46,588/- and set aside the direction for payment of Rs.1,08,797/-.
[Office of the Assistant Commissioner of Central Tax v. Rakesh Singala, 2023 SCC OnLine NCLAT 7, decided on 04-01-2023]
*Judgment by Justice Ashok Bhushan.
Advocates who appeared in this case:
Samiksha Godiyal, Shivalika Rudra Batla and Nakul Rajan, Counsel for the Appellants;
Anand Bajpai and Ravi Kaul, Counsel for the Respondent.
*Ritu Singh, Editorial Assistant has put this report together