2013 (12) TMI 457 - AT - Central Excise

Extension of stay - operation of the orders expired in terms of the 2nd and 3rd pvosisos to Section 35C(2A) of the Central Excise Act, 1944 Held that - An order of waiver of pre-deposit granted under provisions of Section 35F does not, either expressly or by any compelling implication, have a legislatively enjoined sunset period. Waiver of pre-deposit granted always operates during pendency of the appeal. Pre-deposit is a threshold requirement for triggering the substantive jurisdiction of the Tribunal. Pendency of the appeals are not on account of any conduct of the appellants but on account of pendency of a large number of older appeals and a critical supply/demand mismatch in the Tribunal - it is appropriate to grant extension of the stay orders earlier granted, to operate during the pendency of the appeals Decided in favour of Assessee.

Summary

Issues:
Extension of stay of further proceedings for realization of adjudicated liability under Section 35C(2A) of the Central Excise Act, 1944.

Analysis:
The judgment deals with the applications filed by the appellants seeking an extension of stay of all further proceedings for the realization of the adjudicated liability. The orders of stay and waiver of pre-deposit were granted earlier, and the present applications for extension of stay were filed as the operation of the stay orders had expired in terms of the 2nd and 3rd provisos to Section 35C(2A) of the Act.

The 2nd proviso to Section 35C(2A) was considered by the Supreme Court in a previous case, where it was highlighted that a provision leading to the eclipse of an order of stay after a specific period would be inequitable. The court emphasized that in the interest of justice, the appellate forum has the power to grant an extension of stay when an appeal cannot be disposed of due to the backlog of cases and not due to the appellant's actions.

The 3rd proviso to Section 35C(2A) introduced by the Finance Act, 2013, sets a sunset clause where the appellate Tribunal may extend the period of stay if the delay in disposing of the appeal is not due to the party. The judgment interprets that the sunset clause does not restrict the Tribunal's inherent jurisdiction to grant an extension of stay beyond the specified periods, especially when delays are due to institutional factors and not the appellant's tactics.

The judgment also addresses the contention that the expiration of a stay order after a specified period does not bar the Tribunal from granting an extension when necessary. It rejects the argument that the absence of a stay order prevents the grant of an extension, emphasizing that the Tribunal can still consider and grant extensions even after the initial stay order has lapsed.

Furthermore, the judgment distinguishes a case where an order of waiver of pre-deposit was granted, emphasizing that such orders do not have legislatively mandated sunset periods. It clarifies that the waiver of pre-deposit operates during the pendency of the appeal and does not automatically expire after a specific period.

In conclusion, the judgment grants the extension of stay orders earlier granted, considering that the delays in the appeals were not due to the appellants' actions but were a result of the backlog of cases and institutional challenges faced by the Tribunal. The decision ensures that the stay orders remain effective during the pendency of the appeals, providing relief to the appellants in light of the circumstances.