Recovery of Government dues during pendency of stay application - Central Excise - 23/90-CX. 6

Recovery of Government dues during pendency of stay application Circular No. 23/90-CX. 6 Dated 21-12-1990 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise and Customs, New Delhi Subject : Stay/Recovery of Government dues during Pendency of Stay/Dispensation of Prior Deposit Application - Regarding. I am directed to refer to Board's Circular No. 30/86-CX. 6, (F. No. 208/3/86-CX. 6), dated 26/08/1986, No. 80/88-CX. 6, (F. No. 208/31/88-CX. 6) dated 18-11-1988 and No. 7/90-CX. 6 (F. No. 208/107/89-CX. 6), dated 2-3-1990 on the above subject and to say that the matter has been further examined by the Board. The Board took note of the observations of the Bombay High Court made in the judgments in Writ Petitions Nos. 3919/88, 422/88 and 518/88, wherein it was observed that it was hardly fair and just to proceed with the recovery proceedings pending applications for stay of the impugned order before the appellate authorities. The opinion of Ministry of Law on the aforesaid observations of the Bombay High Court was also considered by the Board wherein Ministry of Law have clarified that it is not binding on the Department to wait for decision on a stay application for an indefinite period before starting recovery proceedings. The Board also took note of the observations made by the Himachal Pradesh High Court in the case reported at 1985 CRI. L.J. 1030 wherein the Court had observed as under :- "It requires to be emphasised, in this connection that mere preferment of an appeal does not automatically operate as a stay of the decision under appeal and that till an application for stay is moved and granted by the appellate court, or in the alternative, the Court which rendered the decision is moved and grants an interim stay of the decision pending the preferment of an appeal and grant of stay by the appellate court, the decision continues to be operative". 2. The Board also took note of the fact that in two out of the three orders passed by the Bombay High Court as referred to above the Court had also imposed conditions of Bank Guarantee while granting stay in the concerned cases. It was also noticed that in the case of refunds very often the department is being called upon to refund duty even when the stay applications preferred by the department are pending before the appellate authorities. The Board felt that the same analogy should apply to demands. 3. It was felt that the correct legal position is that unless the assessee obtains a stay the department is within its rights to recover the duty confirmed in an order. However, as a practical step and for administrative convenience, a period of 3 months (one month for filing appeal and stay application and two more months for obtaining orders on the stay application) can be granted before taking coercive steps to recover the dues. If an assessee is genuinely interested, he need not take matter leisurely and wait for full three months for filing the appeal and stay application; he could easily file an appeal and obtain orders on a stay application from the appellant authorities within a period of 3 months from the date of communication of the order confirming demand against him. It was, therefore, decided that assessee should not be granted time beyond 3 months before restoring to coercive measures to recover dues arising out of orders passed by original adjudicating authorities as well as the appellate authorities. However, if a stay application of an assessee is rejected by an appellate authority even before the lapse of the time limit of three months, recovery proceedings should be initiated immediately.