2014 (11) TMI 457 - HC - Central Excise

Power of Tribunal to extend stay beyond the period of 365 days - extension of stay granted earlier - Held that - In view of the decision in case of Commissioner vs. Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) it can be concluded that the Tribunal did not lack the power to extend stay beyond 365 days from the initial date of granting stay. However, if the stand of the revenue is that such extension was without recording reasons or without passing speaking order as required by the decision of this Court in case of Commissioner vs. Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) it would be open for the Department to move a rectification application before the Tribunal.

Summary

Issues:
- Extension of stay beyond 365 days by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in violation of Section 35C(2A) of the Central Excise Act, 1944.
- Requirement of passing a speaking order while extending stay by the Tribunal.

Issue 1: Extension of stay beyond 365 days
The Department appealed the judgment of the CESTAT extending the stay by six months beyond the initial 365 days period. The Department argued that the Tribunal exceeded its jurisdiction under Section 35C(2A) of the Central Excise Act, 1944. However, the High Court referred to the case of Commissioner vs. Small Industries Development Bank of India, where it was held that the Tribunal could extend the stay beyond 365 days if the delay in disposal of the appeal was not due to the appellant and the Tribunal was satisfied with the cooperation of the appellant. The High Court emphasized that the Tribunal should review the situation every 180 days and consider extension applications on a case-by-case basis. The High Court clarified that the Tribunal should not extend stay indefinitely and must prioritize appeals where stay is granted against the revenue.

Issue 2: Requirement of passing a speaking order
The Department contended that the Tribunal did not provide reasons or pass a speaking order while extending the stay, which was necessary as per the decision in the case of Commissioner vs. Small Industries Development Bank of India. The High Court agreed with the Department on this issue and directed the matters to be remanded to the Tribunal for passing appropriate orders within two months. The High Court emphasized the need for the Tribunal to provide a reasoned order when extending stay to ensure transparency and accountability in the process.

In conclusion, the High Court upheld the Tribunal's authority to extend stay beyond 365 days but stressed the importance of recording reasons and passing speaking orders while doing so. The Department was given the option to file a rectification application if the extension was not accompanied by a proper order. The tax appeal was disposed of with these observations.