2013 (2) TMI 188 - HC - Customs

Challenge to circular dated 1 January 2013 issued by CBEC - circular issues directions to Chief Commissioners of Central Excise and Customs in regard to the procedure to be adopted for the recovery of outstanding demands in situations where an appeal is filed against the order of the adjudicating authority before the Commissioner (Appeals) or thereafter before the CESTAT, the High Court or the Supreme Court - assessee s stay application pending - Held that - An assessee who moves an application for waiver and is diligent in pursuing the application cannot be blamed for the inability of the appellate forum to dispose of the stay application. The reasons such as the absence of adequate infrastructure which lead to an accumulation of a backlog or the unavailability of the appellate officer or a duly constituted Bench of the Tribunal are matters which lie beyond the volition of an assessee. If at all, these are matters over which the executive arm of the State has control. Hence, to blame an assessee who is not in default and to initiate recoveries against an assessee who has filed an appeal together with an application for stay merely because the application has remained pending on the file of the decision making authority would be to penalize the assessee for a situation over which the assessee has no control. This would be patently arbitrary and violative of Article 14 of the Constitution. Revenue s submission that during the course of the hearing the field officers of the Revenue who initiate recovery action are independent of the adjudicating or appellate forum and hence have no means of verifying the status of the applications for stay and it is hence for the assessee, when recovery action is initiated to inform the jurisdictional Commissioner of the pendency of the stay application cannot be treated as a valid justification for penalizing an assessee whose conduct is otherwise free from blame. Thus the provisions contained in the impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for reasons beyond the control of the assessee. Where however, an application for stay has remained pending for more than a reasonable period, for reasons having a bearing on the default or the improper conduct of an assessee, recovery proceedings can well be initiated. Thus request the CESTAT to take up the stay application for early disposal and preferably within a period of eight weeks of the date on which an authenticated copy of this order is produced before it.

Issues Involved:
1. Challenge to the circular dated 1 January 2013 by the Central Board of Excise and Customs.
2. Procedure for recovery of outstanding demands during the pendency of stay applications.
3. Legality and fairness of initiating recovery proceedings while stay applications are pending.
4. Impact of administrative delays on the assessee's liability for recovery.
5. Recommendations for incorporating electronic technology in judicial and quasi-judicial proceedings.

Detailed Analysis:

1. Challenge to the Circular Dated 1 January 2013 by the Central Board of Excise and Customs:
The petitioners challenged the circular issued by the Central Board of Excise and Customs on 1 January 2013, which directed Chief Commissioners of Central Excise and Customs on the procedure for recovering outstanding demands when an appeal is filed against an adjudicating authority's order. The circular mandated recovery proceedings even if a stay application was pending, which the petitioners argued was arbitrary and violative of Article 14 of the Constitution.

2. Procedure for Recovery of Outstanding Demands During the Pendency of Stay Applications:
The circular stipulated various scenarios under which recovery proceedings should be initiated. For instance, if no appeal was filed within the statutory period, recovery would commence after the expiration of the statutory period. If an appeal was filed without a stay application, recovery would start immediately. The contentious issue was the initiation of recovery proceedings 30 days after filing an appeal if no stay was granted, even if the stay application was pending.

3. Legality and Fairness of Initiating Recovery Proceedings While Stay Applications are Pending:
The court found it arbitrary to initiate recovery proceedings while a stay application was pending due to the appellate authority's inability to dispose of it within 30 days. The court emphasized that penalizing the assessee for delays not attributable to them, such as administrative reasons or the unavailability of a bench, was unfair. The court referenced earlier circulars and judicial decisions that supported the non-initiation of recovery during the pendency of stay applications.

4. Impact of Administrative Delays on the Assessee's Liability for Recovery:
The court noted that administrative delays, such as insufficient judicial infrastructure or the unavailability of officers, should not result in penalizing the assessee. The court cited the Supreme Court's judgment in Commissioner of Customs and Central Excise, Ahmedabad v. Kumar Cotton Mills Pvt. Ltd., which held that an assessee should not be punished for delays beyond their control. The court also referenced the decision in Nedumparambil P. George v. Union of India, which supported this view.

5. Recommendations for Incorporating Electronic Technology in Judicial and Quasi-Judicial Proceedings:
The court suggested that the Union Ministry of Finance should incorporate electronic technology to record proceedings and ensure transparency and accountability. This would help in managing the backlog and ensuring timely disposal of stay applications. The court recommended that the filing of appeals and stay applications should be recorded electronically, and hearing dates should be published online. This would protect the interests of both the revenue and the assessees.

Conclusion:
The court concluded that the provisions in the circular mandating recovery proceedings 30 days after filing an appeal if no stay was granted could not be applied to assessees whose stay applications were pending for reasons beyond their control. The court directed that no coercive recovery steps should be taken while stay applications were pending due to administrative delays. The court disposed of the petitions with directions for expeditious disposal of stay applications and no order as to costs.

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