2015 (1) TMI 71 - HC - Customs

Power of Tribunal to extend stay beyond 365 days - Held that - In view of the decision of this Court in case of Commissioner vs. Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) it can be concluded that the Tribunal did not lack the power to extend stay beyond 365 days from the initial date of granting stay. However, if the stand of the revenue is that such extension was without recording reasons or without passing speaking order as required by the decision of this Court in case of Commissioner vs. Small Industries Development Bank of India (supra) it would be open for the Department to move a rectification application before the Tribunal. - Decided against Revenue.

Summary

Issues:
- Interpretation of Section 129B(2A) of the Customs Act, 1962 regarding the power of the CESTAT to extend interim stay beyond 365 days.
- Requirement of the CESTAT to pass a speaking order while extending stay.

Analysis:

Issue 1: Interpretation of Section 129B(2A) of the Customs Act, 1962
The primary issue in this case revolved around the power of the CESTAT to extend interim stay beyond 365 days as per Section 129B(2A) of the Customs Act, 1962. The Revenue contended that the Tribunal did not possess such authority under the statutory provisions. However, the High Court referred to the case of Commissioner vs. Small Industries Development Bank of India, where it was established that the Tribunal, in appropriate cases, may extend the stay even beyond the 365-day limit from the initial grant of stay. The Court emphasized that the Tribunal must review the situation every 180 days and consider extension applications on a case-by-case basis. It was clarified that the Tribunal should not extend stay indefinitely and must prioritize appeals where stay is operative against the revenue. The Court held that the Tribunal had the power to extend stay beyond 365 days but emphasized the need for the Tribunal to pass a speaking order and maintain a separate register for cases with stay orders.

Issue 2: Requirement of Passing a Speaking Order
Another significant aspect of the judgment was the requirement for the CESTAT to pass a speaking order while extending stay. The Court noted that the Tribunal must provide reasons for extending the stay and pass reasoned orders. In the absence of such reasons or speaking orders, the matters were remanded to the Tribunal to pass appropriate orders afresh within a specified timeframe. The Court directed the Tribunal to ensure that the stay orders, which were extended, continued for a further period until the appeals were disposed of. It was emphasized that the Tribunal should not let the applications for extension of stay become infructuous and should aim to dispose of the appeals promptly, even during the extended stay period.

In conclusion, the High Court clarified the interpretation of Section 129B(2A) of the Customs Act, 1962, regarding the power of the CESTAT to extend interim stay beyond 365 days. The Court affirmed that the Tribunal could extend stay beyond the stipulated period but stressed the importance of passing speaking orders and reviewing cases every 180 days. The judgment highlighted the necessity for the Tribunal to prioritize appeals with stay orders and maintain proper records. The Court's decision underscored the significance of providing reasons for extending stay and ensuring timely disposal of appeals to prevent undue delays in the legal process.