2018 (12) TMI 937 - HC - Central Excise

Stay of operation of an order dated 22.01.2014 - Held that - It would emerge that the pending appeal before the Tribunal is an offshoot of the earlier order of the Tribunal, which is in challenge in this tax appeal. The appeal before the Tribunal is admitted after the appellant has made the mandatory predeposit. Allowing the Tribunal at this stage to proceed further with the appeal, would duplicate the efforts. If the present appeal of the appellant was to succeed, the orders consequential to the Tribunal s judgment would automatically not survive. The Notice of Motion is disposed of.

Summary

Issues:
1. Stay of operation of an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
2. Validity of adjudication order-in-original dated 31.3.2006.
3. Denial of credit on input Naphtha under Rule 57I of the Central Excise Rules, 1944.
4. Dismissal of appeal by the Tribunal based on the finding of fictitious buyers of finished goods.
5. Maintainability of denial of credit on inputs by invoking the extended period of limitation.
6. Applicability of Section 38A of the Central Excise Act, 1944.
7. Request for stay of the order of the Tribunal.

Analysis:

1. The appellant sought a stay of an order dated 22.01.2014 passed by the CESTAT. The appeal challenged the dismissal of the appellant's appeal by the CESTAT. Substantial questions of law were framed regarding the validity of the adjudication order-in-original dated 31.3.2006, denial of credit on input Naphtha, dismissal of appeal based on the finding of fictitious buyers, and the maintainability of denial of credit on inputs by invoking the extended period of limitation.

2. The Tribunal remanded the proceedings to the adjudicating authority for passing a fresh order and addressed the appellant's contention regarding the applicability of Section 38A of the Central Excise Act, 1944. The Tribunal held that the decision in the case of Sunrise Structural & Engineering Ltd. wrongly distinguished the judgment of the larger bench. The correctness of the Tribunal's view was under scrutiny in the tax appeal.

3. The appellant had previously attempted to obtain a stay against further proceedings, which was disposed of by the Division Bench. Following a remand order, the adjudicating authority passed a fresh order, which was challenged by the appellant before the Tribunal. The Department requested urgent hearing of the appeal, leading to the appellant's fresh request for a stay of the Tribunal's order.

4. The High Court observed that allowing the Tribunal to proceed further with the appeal would duplicate efforts, as success in the present appeal would render the orders consequential to the Tribunal's judgment irrelevant. The Court noted that the decision in the case of Sunrise Structural & Engineering Ltd. favored the assessee, with the Department appealing before the High Court.

5. In light of the circumstances, the High Court requested the Tribunal not to proceed further with the assessee's appeals until the disposal of the present appeal. The Notice of Motion seeking a stay was disposed of by the High Court.