2015 (8) TMI 1056 - HC - Central Excise

Power of tribubal to extend the stay beyond the period of 365 days - whether the Tribunal is vested with the power to extend the stay order beyond the specified maximum time limit prescribed in Section 35-C(2-A) of the Central Excise Act - Held that - if the Tribunal would not dispose of the appeal within 365 days under the first, second and third proviso of Section 35C (2A) of the Act which was not attributable to the assessee, it would not mean that the Tribunal was divested with its incidental powers in not extending the interim order. The three proviso, in our view, cannot be read as mandatory in nature. - Section 35 C (2A) gave a mandate to the Tribunal to decide the appeal within three years where it was possible to do so . These words indicate the intention of the legislation, namely, that the appeal should be decided as far as possible within three years and therefore, the provision is not conclusive to be determined as mandatory in nature. The provisos to Section 35C (2A) of the Act has no relevance to the pre-deposit of amount under Section 35F of the Act. Once the proviso to Section 35C(2A) of the Act has been omitted, the embargo upon the Tribunal to limit the stay order for a limited period has now been removed. Consequently, the incidental power of the Tribunal to grant interim relief pending disposal of the appeals is now not confined to a limited period. - Tribunal has the power to grant stay as incidental or ancillary to the appellate jurisdiction as held by the Supreme Court in Income Tax Officer, Cannanore vs. M.K.Mohammad Kunhi. 1968 (9) TMI 5 - SUPREME Court , which was in relation to the scope and power of the Appellate Tribunal under the Income Tax Act. In our view, the same principle of law will govern the power of the Tribunal under the Central Excise Act. - no substantial question of law arises for consideration. - Decided against Revenue.

Summary

Issues Involved:
1. Whether the Tribunal has the power to extend the stay order beyond the specified maximum time limit prescribed in Section 35-C(2-A) of the Central Excise Act.
2. Interpretation of Section 35-C(2-A) and its provisos.
3. Effect of the amendment to Section 35-C(2-A) by the Finance Act, 2014.

Detailed Analysis:

Issue 1: Tribunal's Power to Extend Stay Orders
The primary legal question addressed was whether the Tribunal is vested with the power to extend the stay order beyond the specified maximum time limit prescribed in Section 35-C(2-A) of the Central Excise Act. The Tribunal had extended interim orders in various appeals, some for six months and others until the disposal of the appeal. The Department challenged this, asserting that the Tribunal lacked the authority to extend the stay beyond 365 days.

Issue 2: Interpretation of Section 35-C(2-A) and its Provisos
Section 35-C(2-A) was added to the Act by the Finance Act, 2002, and further amended by the Finance Act, 2013, introducing three provisos. The first proviso mandated the disposal of appeals within 180 days if a stay order was issued. The second proviso stated that if the appeal was not disposed of within 180 days, the stay order would stand vacated. The third proviso allowed for an extension of the stay for an additional 185 days if the delay was not attributable to the assessee, but the stay would stand vacated after 365 days if the appeal was still pending.

The Court examined previous judgments on this issue. It was noted that the Tribunal could extend the stay order but not beyond 365 days. However, the High Court under Article 226 of the Constitution could extend the stay order. The Court also recognized that the Tribunal could entertain a fresh stay application if the appeal was not disposed of within 365 days.

Issue 3: Effect of the Amendment to Section 35-C(2-A) by the Finance Act, 2014
The Finance Act (No.2) of 2014 amended Section 35-C(2-A) by omitting the first, second, and third provisos. This amendment removed the limitation on the Tribunal's power to grant stay orders beyond a specified period. The Court concluded that the omission of these provisos meant that the Tribunal could grant stay orders without the previous time constraints, provided the appeal was disposed of within three years "where it is possible to do so."

The Court emphasized that the main provision of Section 35-C(2-A) was directory, not mandatory, thus the provisos should also be interpreted as directory. This interpretation aimed to prevent miscarriage of justice, ensuring that appellants were not subjected to irreparable harm due to procedural delays not attributable to them.

Conclusion:
The Court held that the Tribunal retains the incidental power to extend interim orders beyond 365 days, especially when the delay in disposing of the appeal is not attributable to the assessee. The amendments to Section 35-C(2-A) by the Finance Act, 2014, removed the limitations on the Tribunal's power to grant stay orders, allowing them to remain in force unless limited by the Tribunal itself. Consequently, no substantial question of law arose for consideration, and all the appeals were dismissed. The Court also noted that the rules of procedure are designed to advance the cause of justice and not to defeat it.