2014 (12) TMI 734 - HC - Central Excise

Extention of stay order - Whether the Hon ble CESTAT has erred in granting waiver of pre-deposit of assessed demand in favour of the respondent during pendency of the appeal thereby extending the period of stay beyond 365 days ignoring the recent amendment to Section 35C of the Central Excise Act, 1944 - Held that - only reason given by the CESTAT for extending the stay order to operate until decision of the appeal, is that the appeal could not be disposed of for no fault of the petitioner, and that in view of pendency of several older appeals, the stay order deserves to be extended till the hearing of appeal. Thousands of appeals are pending in the CESTAT, arising from six States, for which earlier there was only one Bench and only recently a second Bench has been constituted. The final hearing of the appeals ordinarily takes about three years in CESTAT, and that in the present case also, hearing of appeal, filed in the year 2012, will take some more time. In the Finance Act, 2014, with effect from 01.10.2014, Section 35C(2A) has been omitted and that appeals can be filed now for hearing with a deposit of 10% of the demand. - CESTAT, New Delhi, to decide the appeal as expeditiously as possible, and preferably within a period of six months from today. The waiver of pre-deposit will be valid upto the period of six months - Following decision of Commissioner of Cus. & C.Ex., Kanpur Vs. J.P. Transformers 2013 (10) TMI 1194 - ALLAHABAD HIGH COURT - Appeal disposed of.

Summary

Issues Involved:
Delay in filing appeal under Section 35G of the Central Excise Act, 1944; Extension of stay order by CESTAT; Interpretation of Section 35C of the Act of 1944; Application of Proviso in Section 35C(2A) by the Finance Act, 2013; Judicial precedent on extending stay orders beyond 365 days; Large pendency of appeals in CESTAT; Omission of Section 35C(2A) by the Finance Act, 2014.

Analysis:
The High Court heard the Department's counsel and the assessee's counsel regarding the delay in filing a Central Excise Appeal under Section 35G of the Central Excise Act, 1944, which was reported to be delayed by 76 days. The Court found the delay adequately explained and allowed the condonation application, thereby condoning the delay in filing the appeal. The delay was attributed to good and sufficient grounds.

The impugned order by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) extended the operation of the stay granted to the respondent during the pendency of the appeal. The appeal was based on a question of law regarding the extension of stay beyond 365 days, ignoring the recent amendment to Section 35C of the Central Excise Act, 1944. The question raised sought interpretation of Section 35C, referencing a Supreme Court judgment for guidance.

A Proviso was added to Section 35C(2A) by the Finance Act, 2013, allowing for an extension of the stay period beyond 365 days under certain conditions. The Department's counsel argued that the extension of the stay order by CESTAT was not justified solely based on the pendency of older appeals and cited judgments from other High Courts where such extensions were deemed erroneous.

The Court noted the large pendency of appeals in CESTAT, arising from multiple states, and the time taken for final hearings. Considering these factors, the Court disposed of the appeal with directions for CESTAT to decide the appeal expeditiously, preferably within six months. The waiver of pre-deposit was allowed to continue for six months from the date of the judgment. The Court acknowledged the challenges in timely disposal of appeals and the subsequent amendment omitting Section 35C(2A) by the Finance Act, 2014, allowing appeals with a deposit of 10% of the demand.

In conclusion, the Court's decision aimed to balance the need for timely disposal of appeals with the practical challenges faced due to the large pendency of cases, providing clear directions for expeditious resolution while ensuring fairness to the parties involved.