2014 (3) TMI 352 - HC - Central Excise

Recovery proceedings where the stay application is pending - Disallowance of CENVAT Credit - Held that - Provisions contained in the 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 as explained in the earlier part of the judgment - we dispose of the petition by requesting the CESTAT to dispose of the stay application filed by the petitioner, within a period of eight weeks of the receipt of a certified copy of this order - In the meantime, no coercive action against the petitioner for recovery of the demand will be taken - Following decision of Larsen & Toubro Ltd. Vs. Union of India 2013 (1) TMI 555 - CESTAT, CHENNAI - Decided partly in favour of assessee.

Summary

Issues:
Adjudication of CENVAT credit disallowance, recovery order, penalty imposition, delay in hearing stay application, recovery notice issuance, applicability of recovery proceedings during pending stay application.

Analysis:
The judgment pertains to an order of adjudication passed against the petitioner disallowing CENVAT credit of Rs.2.32 crores, along with the imposition of a penalty under Section 11AC of the Central Excise Act, 1944. The petitioner filed an appeal before the CESTAT, but due to non-availability of the Bench, the stay application could not be heard promptly. The petitioner highlighted a notice from the Tribunal indicating that only stay applications in service tax matters would be taken up on a specific date. Subsequently, a recovery notice was issued by the third respondent, leading to the petitioner seeking relief through this petition.

In reference to the decision in Larsen & Toubro Ltd. Vs. Union of India, the Court acknowledged that recovery proceedings should not be initiated against an assessee who has filed a stay application pending beyond their control. The judgment cited that recovery actions could be initiated if the delay in processing the stay application is due to the default or improper conduct of the assessee. The Court noted that this view aligns with similar perspectives taken by eight High Courts, indicating a consistent legal interpretation across jurisdictions.

Consequently, the High Court disposed of the petition by instructing the CESTAT to expedite the hearing of the petitioner's stay application within eight weeks of receiving a certified copy of the order. It was further directed that no coercive action for recovery should be taken against the petitioner during this period. The judgment concluded by stating that there would be no order as to costs, thereby resolving the issues raised in the petition effectively and providing clarity on the applicability of recovery proceedings in cases involving pending stay applications.