2014 (9) TMI 221 - HC - Central Excise

Recovery of dues when appeal with stay application is pending before CESTAT - Classification of isolators - Classification under Chapter 85.35 or 85.38 - Held that - The second appeal with the waiver-cum-stay petition filed by the petitioner before the second respondent. Tribunal is still pending consideration, as there was no continuous sitting of the Bench. In the meanwhile, the first respondent had passed the impugned order. It is the submission of the learned counsel for the petitioner that the first respondent has no right to pass the impugned order when the waiver-cum-stay petition is pending before the Tribunal and it may defeat the very object of the waiver petition. But, the petitioner having failed to comply with the condition of pre-deposit of ₹ 1,50,00,000/- imposed by the Commissioner (Appeals), it cannot find fault with the first respondent s action in passing the impugned order. - It is settled law that when there is no stay of the proceedings, it is always open to the authorities to initiate appropriate recovery proceedings. However, the first respondent, in the light of the directions issued by this Court in Writ Petition No. 34350 of 2003, ought to have considered the case of the petitioner. During the course of arguments, it is reported that there is now regular sitting of the Bench and if the second respondent is directed to dispose of the waiver-cum-stay petition filed by the petitioner within a stipulated period, the entire grievance of the petitioner would be redressed. - CESTAT to hear the waiver-cum-stay petition filed by the petitioner and dispose of the same in accordance with law - recovery proceedings stayed.

Summary

Issues:
1. Classification of isolators under Central Excise Tariff Act, 1985.
2. Impugned order for payment of arrears without stay of recovery proceedings.
3. Jurisdiction of Central Excise Officers during pendency of appeal.
4. Compliance with pre-deposit conditions for appeal.

Analysis:

Issue 1: Classification of isolators under Central Excise Tariff Act, 1985
The dispute revolves around the classification of isolators by the petitioner under Chapter 85.35, while the Deputy Commissioner claimed they should be under Chapter 85.38, attracting a higher duty. The original order imposed a differential duty and penalty, leading to appeals and subsequent rejections by the Commissioner of Central Excise (Appeals).

Issue 2: Impugned order for payment of arrears without stay of recovery proceedings
The petitioner challenged the impugned order directing payment of arrears without a stay of recovery proceedings. The petitioner argued that as the appeal with a waiver/stay application was pending due to the absence of regular Bench sittings, the first respondent should not proceed based on the Andhra Pradesh High Court judgment. However, the respondent justified the order based on instructions from the Chief Commissioner.

Issue 3: Jurisdiction of Central Excise Officers during pendency of appeal
The petitioner contended that the first respondent should not have passed the impugned order while the appeal was pending before the Tribunal, as it could undermine the purpose of the waiver petition. The Court acknowledged that without a stay, authorities can initiate recovery proceedings, but emphasized that the first respondent should have considered the petitioner's case in light of previous court directions.

Issue 4: Compliance with pre-deposit conditions for appeal
The failure of the petitioner to comply with the pre-deposit condition imposed by the Commissioner (Appeals) was noted. The Court directed the Tribunal to expedite the hearing of the waiver/stay petition within a specified period to address the petitioner's concerns. It was emphasized that until then, no recovery proceedings should be pursued by the first respondent.

In conclusion, the writ petition was disposed of with a directive to the Tribunal to promptly address the waiver/stay petition, ensuring a fair resolution for the petitioner while highlighting the importance of complying with legal procedures and conditions set by the authorities.