Dalmia Cement (Bharat) Ltd. Vs Union of India (Bombay High Court)
Summary: Bombay High Court set aside four adjudication orders dated 31.07.2020 and 31.12.2020 that partly denied CENVAT Credit and directed recovery of the disallowed credit under Section 11A of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules, 2004. The petitioners contended that the underlying statutory claims had not formed part of the insolvency resolution proceedings and therefore stood extinguished after approval of the Resolution Plan. The Revenue argued that the impugned proceedings merely concerned reversal of wrongly availed input credit and were not recovery proceedings, besides contending that the petitioners should pursue the statutory appellate remedy.
The High Court rejected that distinction because the orders not only determined CENVAT Credit entitlement but expressly directed recovery under Section 11A with interest and imposed penalty under Section 11AC, making them composite recovery orders. Applying Ghanashyam Mishra And Sons Private Limited, the Court held that once a resolution plan is approved, statutory dues owed to Government authorities that are not part of the resolution plan stand extinguished and proceedings concerning such pre-approval dues cannot continue.
Since the claims underlying the impugned orders had not been lodged as part of the resolution process, the Court held that they could no longer be pursued. The availability of an alternative remedy did not bar writ jurisdiction because the challenge concerned the respondents’ jurisdiction to recover extinguished claims rather than the merits of the CENVAT adjudication. Following M/s Ruchi Soya Industries Ltd., the Court also directed that any pre-deposit made by the petitioners be refunded with interest at prevailing bank rates within eight weeks. :chatgpt-content-reference{index=”0″} :chatgpt-content-reference{index=”1″}
