2014 (9) TMI 715 - HC - Central Excise

Extension of stay order granted - Held that - amendment, which came into effect from 10.5.13, by virtue of Section 98 of Finance Act, 2013 is only an extension of proviso 1 and 2 of sub-section (2A) of Section 35C. All that the 3rd proviso states is that where such appeal is not disposed of within the period specified in the first proviso, the Appellate Tribunal may, on an application made in this behalf by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and it further states that if the appeal is not disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso, the stay order referred to in the 1st proviso, viz., the order of stay shall, on the expiry of the said period, be vacated. Tribunal has considered the application filed by the respondent/assessee and has given a reason for grant of extension of interim order by holding that the Tribunal is granting the extension of interim order only on the ground that the Tribunal is unable to dispose of the appeal in time due to huge pendency of appeals before the Tribunal. When the appellate authority itself clearly concedes the fact that the delay is not on account of the respondent/assessee, the Tribunal has rightly relied upon the decision of the Supreme Court in Kumar Cotton Mills case (supra) and we find no reason to differ with the said stand taken by the Tribunal in granting extension of the interim order by relying on the said judgment. - No substantial question of law arises - Decided against Revenue.

Summary

Issues:
Extension of stay granted by Tribunal due to huge pendency of appeals.

Analysis:
The civil miscellaneous appeal challenged the order of the Tribunal extending the stay granted to the respondent/assessee until the disposal of the appeal. The Tribunal justified its decision based on the huge pendency of appeals, following the Supreme Court judgment in CCE, Ahmedabad Vs Kumar Cotton Mills Pvt. Ltd. The Revenue contended that the Tribunal should have vacated the stay as per the 3rd proviso to Section 35C (2A) introduced by the Finance Act, 2013.

The 3rd proviso to sub-section (2A) of Section 35C allows the Tribunal to extend the stay period beyond 180 days if the delay in disposing of the appeal is not attributable to the party. This provision aligns with the principles laid down by the Supreme Court in the Kumar Cotton Mills case. The Tribunal's decision to extend the stay was found justified as the delay was not due to the respondent/assessee, in line with the Supreme Court's guidance.

The Supreme Court's interpretation in the Kumar Cotton Mills case emphasized that the Tribunal can extend the stay only on good cause and if the delay is not attributable to the party. The 3rd proviso mirrors this principle, limiting the extension period to 185 days beyond the initial 180 days. The Tribunal's decision to extend the stay was deemed appropriate as the delay was due to the Tribunal's backlog, not the respondent/assessee.

The High Court found no substantial question of law in the appeal, citing the Kumar Cotton Mills case as precedent. The appeal was dismissed, with a hope expressed for the Tribunal to expedite the appeal's disposal in line with the legislative intent.

In conclusion, the Tribunal's decision to extend the stay was upheld by the High Court, emphasizing the importance of considering the reason for delay and ensuring that parties are not penalized for factors beyond their control. The legal principles established by the Supreme Court guided the interpretation and application of the relevant provisions in this case.