2014 (3) TMI 752 - AT - Central Excise

Extension of Stay order - Jurisdictional Superintendent has issued a letter dated 11.11.2013 directing the appellant to make payment of the interest and penalty on the ground that in view of the amended provisions of section 35C of the Central Excise Act, 1944, the total period of stay can be only 365 days and not beyond - Held that - appellant has already paid the duty amount and stay is in respect of only interest and penal liability. In these circumstances, the department is restrained from proceeding with any coercive measures for recovery of the dues adjudged against the appellant - Decided in favour of assessee.

Issues:
1. Stay order duration under amended provisions of section 35C of the Central Excise Act, 1944.
2. Extension of stay period due to administrative backlog.
3. Applicability of previous judicial decisions on stay orders.
4. Restraining coercive measures for recovery of interest and penalty.

The judgment pertains to a miscellaneous application filed by M/s Bhushan Steel Ltd. seeking relief from a letter issued by the jurisdictional Superintendent directing payment of interest and penalty despite a stay order granted by the Tribunal. The appellant argued that the appeal delay was due to the Tribunal's backlog, not their fault, citing the precedent set by the Hon'ble Apex Court in Kumar Cotton Mills Pvt. Ltd. The appellant had paid the duty amount, and the stay only applied to interest and penalty. Referring to a recent decision by the Hon'ble Bombay High Court in the case of India Steel Works Ltd., it was held that recoveries can only be made for the duty amount upon expiry of the stay period, not for interest and penal liabilities. Consequently, the department was restrained from taking coercive measures for recovery, and the miscellaneous application was allowed.

This judgment addresses the issue of the duration of a stay order under the amended provisions of section 35C of the Central Excise Act, 1944. The appellant, M/s Bhushan Steel Ltd., had obtained a stay order from the Tribunal, which was extended until the disposal of the appeal. However, the jurisdictional Superintendent issued a letter directing payment of interest and penalty based on the amended provisions limiting the total stay period to 365 days. The appellant argued that the delay in appeal disposal was due to the Tribunal's backlog, not their fault, and relied on judicial precedents to support their case.

The judgment delves into the extension of the stay period due to administrative backlog. The appellant highlighted the substantial pendency of appeals before the Mumbai Bench of the Tribunal, emphasizing that the delay in disposal was not attributable to any fault on their part. Citing the precedent set by the Hon'ble Apex Court in Kumar Cotton Mills Pvt. Ltd., the appellant argued that the Tribunal could extend the stay period on good cause, especially when the delay was not due to the appellant's fault.

The judgment also discusses the applicability of previous judicial decisions on stay orders. Referring to the Hon'ble Bombay High Court's decision in the case of India Steel Works Ltd., the judgment emphasized that recoveries could only be made for the duty amount upon the expiry of the stay period, not for interest and penal liabilities. This interpretation guided the decision to restrain the department from taking coercive measures for the recovery of interest and penalty against the appellant, M/s Bhushan Steel Ltd.

Finally, the judgment addresses the issue of restraining coercive measures for the recovery of interest and penalty. Given that the appellant had already paid the duty amount and the stay only applied to interest and penal liability, the department was prohibited from proceeding with any coercive measures for recovery. The miscellaneous application filed by M/s Bhushan Steel Ltd. was allowed, providing relief to the appellant in this matter.

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