2013 (9) TMI 698 - HC - Central Excise

Stay Operation - Coercive Recovery - Restraining the Department from enforcing coercive recovery of the duty against the applicant Held that - Under the circumstances and in the facts and circumstances of the case, more particularly when the applicant was a public sector undertaking and the fact that if the recovery proceedings qua recovery of penalty was stayed, it will meet with the ends of justice and it will be in the fitness of things. It was directed that during the pendency and final hearing of the main Tax Appeal, there shall be stay of further operation and implementation of the order passed by the CESTAT with respect to penalty only - Meaning thereby, During the pendency and final disposal of the main Tax Appeal, there shall not be any coercive steps/recovery proceedings to recovery the amount of penalty and the applicant to pay the entire amount of duty liability and interest and whatever amount was already paid, the same shall be appropriated towards the duty liability and interest - However, aforesaid adjustment shall be without prejudice to the rights and contentions of respective parties in the main Tax Appeal.

Summary

Issues Involved:
Interim order to stay operation and implementation of the Order dated 24th March 2010/19th May 2010 passed by CESTAT, and to restrain authorities from enforcing coercive recovery of duty against the applicant.

Analysis:
The applicant, a public sector undertaking, sought an interim order to stay the implementation of the Order passed by CESTAT and to prevent coercive recovery of the duty. The duty liability confirmed was Rs. 4,62,11,753/= with an equal penalty imposed. The total liability of the applicant was approximately Rs. 17 Crores, inclusive of duty, penalty, and interest. The applicant had already paid a significant amount towards the liability. The applicant argued for interim relief, citing that 50% of the amount had been paid and being a public sector undertaking, it was just to grant stay on further operation of the impugned order.

The respondent, Revenue, opposed the interim relief, stating that no financial constraint was pleaded by the applicant and being a public sector undertaking alone was not sufficient grounds for granting the relief. The Division Bench had previously not granted interim relief, leading to subsequent applications seeking the same relief. Despite the substantial amount already paid by the applicant, the Revenue insisted on recovery, prompting the applicant to file for interim relief.

Considering the circumstances, the Court allowed the application in part. It directed a stay on the implementation of the impugned order with respect to penalty only during the pendency and final hearing of the main Tax Appeal. Coercive steps for penalty recovery were stayed, and the applicant was required to pay the entire duty liability and interest. Any amount already paid would be adjusted towards the duty and interest, without prejudice to the rights of the parties in the main Tax Appeal. The rule was made absolute to this extent for the specific application.

Consequently, no further orders were needed for the other applications, which were disposed of accordingly based on the decision made in the specific application allowed partially.