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2014 (10) TMI 724 - AT - Central ExcisePower of tribunal to grant stay beyond the total period of 365 days - extension of stay granted earlier - extension order should be speaking or not - Held that - even in a case where the period of 365 days has passed from the date of initial grant of stay but the appeal could not be disposed of for reasons not attributable to the appellant/ assessee (in whose favour the stay was granted); and where the Tribunal is satisfied that the appellant/ assessee was ready and willing for disposal of the appeal and/ or had not indulged in any protractive strategies, extension of stay could be granted (beyond the period of 365 days) by passing a speaking order disclosing the satisfaction of the Tribunal as to absence of any delay/ protractive stratagems by the appellant/ assessee resulting in non disposal of the appeal or that the appeal could not be disposed of on account of pendency of several appeals or other reasons attributable to the structure and context of the Tribunal or other appropriate reasons. Appellant in whose favour an order of stay earlier granted stood vacated on expiry of 180 days or 365 days as the case may be, may present an application seeking extension of stay by pleading the necessary facts as would authorise the exercise of discretion by this Tribunal for grant of such extension. The Registry is directed to maintain a separate register to record data with respect to the appeals in which stay has been granted and other appeals where no stay is granted, so as to enable prioritised listing of appeals where stay has been granted, subject to infrastructure and organisational limitations of CESTAT - Following decision of Commissioner Versus Small Industries Development Bank of India 2014 (7) TMI 738 - GUJARAT HIGH COURT and Commissioner of Central Excise Versus Disha Engineers 2014 (8) TMI 737 - GUJARAT HIGH COURT - Matter remanded back - Decided in favour of assessee.
Issues Involved:
1. Whether the third proviso to Section 35C(2A) of the Central Excise Act, 1944, disables CESTAT from granting an extension of stay beyond 365 days from the initial grant of an order of stay. 2. The interpretation and applicability of amendments to Sections 35C and 35F of the Central Excise Act by the Finance Act, 2014. 3. The impact of judicial precedents on the interpretation of the third proviso to Section 35C(2A). Detailed Analysis: Issue 1: Extension of Stay Beyond 365 Days: The primary issue referred for consideration was whether the third proviso to Section 35C(2A) of the Central Excise Act, 1944, disables CESTAT from granting an extension of stay beyond 365 days from the initial grant of an order of stay, notwithstanding that the delay in disposal of an appeal is not attributable to the appellant. The Tribunal examined the legislative history and judicial interpretations of Section 35C(2A) and its provisos. The third proviso, introduced by the Finance Act, 2013, stipulates that if an appeal is not disposed of within 365 days from the date of the initial stay order, the stay shall stand vacated. However, the Tribunal noted that various High Courts, including Gujarat and Madras, have interpreted similar provisions to allow extensions beyond 365 days if the delay is not attributable to the appellant and the Tribunal is satisfied with the appellant's conduct. Issue 2: Amendments by the Finance Act, 2014: The Tribunal also considered the amendments to Sections 35C and 35F by the Finance Act, 2014, which omitted the first, second, and third provisos to sub-section 2A of Section 35C and substituted Section 35F with a fixed pre-deposit regime. The Tribunal noted that the amendments were prospective and would apply to appeals and stay applications presented after the commencement of the Finance Act, 2014. The Tribunal declined to pronounce on the applicability of the third proviso to appeals involving causes of action arising before 10.05.2013, as this issue was beyond the scope of the reference. Issue 3: Judicial Precedents: The Tribunal analyzed several judicial precedents, including decisions of the Karnataka, Delhi, Rajasthan, Madras, Gujarat, and Punjab & Haryana High Courts, to interpret the third proviso to Section 35C(2A). The Karnataka and Delhi High Courts ruled that the Tribunal has no power to grant stay beyond 365 days, even if the delay is not attributable to the assessee. In contrast, the Gujarat High Court in Commissioner vs. Small Industries Development Bank of India and other cases held that the Tribunal could extend the stay beyond 365 days if the delay is not attributable to the appellant and the Tribunal is satisfied with the appellant's conduct. The Tribunal adopted the Gujarat High Court's interpretation, allowing extensions beyond 365 days under specific conditions. Conclusion: The Tribunal concluded that even if the period of 365 days has passed from the date of the initial grant of stay, the Tribunal could grant an extension if the delay in disposing of the appeal is not attributable to the appellant, and the appellant was ready and willing for disposal of the appeal. The Tribunal directed the Registry to maintain a separate register to prioritize appeals where stay has been granted, subject to infrastructure and organizational limitations. The reference was answered accordingly, and all present applications/appeals were to be listed before the appropriate Bench for disposal on merits. Pronounced on 30.09.2014.
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