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TMI Blog2013 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective Respondents. By consent, the Petitions are taken up for hearing and final disposal. 2. In this batch of Petitions under Article 226 of the Constitution there is a challenge to a circular dated 1 January 2013 issued by the Central Board of Excise and Customs. The circular issues directions to Chief Commissioners of Central Excise and Customs in regard to the procedure to be adopted for the recovery of outstanding demands in situations where an appeal is filed against the order of the adjudicating authority before the Commissioner (Appeals) or thereafter before the CESTAT, the High Court or the Supreme Court. The assessees are aggrieved by the stipulation which has now been brought into force, the effect of which is that though an application for stay of the recovery of the demand has been filed before the appellate forum, recoveries would be proceeded with on the expiry of a stipulated period, and in certain cases immediately. According to the Petitioners when the stay application remains to be disposed of due to the inability of the appellate authority to take up the application for hearing and for disposal, and without any default on the part of the assessee, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for hearing before the CESTAT on 5 February 2013. 4. Coercive action against the Petitioners is sought to be initiated on the basis of a circular issued by the Central Board of Excise and Customs on 1 January 2013. Now before we deal with the contents of the circular and the nature of the challenge, it would be necessary to advert to some of the earlier circulars which are now sought to be rescinded by the circular in question. On 18 November 1988 a circular was issued noting that some High Courts as well as the CEGAT had observed that it was not fair on the part of the Central Excise Department to take recourse to coercive measures for the recovery of government dues during the pendency of stay applications filed by assessees. The circular noted that the matter had been examined by the Board in consultation with the Union Law Ministry which had opined that the department was within its rights to proceed with recovery proceedings after waiting for a decision on the stay application for a reasonable period, which would depend upon the facts and circumstances of a particular case. The Board accepted the advice of the law ministry noting that the mere pendency of a stay applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in from taking coercive action till the period of six months of filing a stay petition before the CESTAT or till the disposal of the stay petition, whichever is earlier. This, it was however clarified, would apply to stay applications filed with first stage appeals arising out of original orders of the Commissioners and not to further appeals. 5. All the earlier circulars which have been noted above have now been rescinded by the circular dated 1 January 2013. The impugned circular provides that henceforth recovery proceedings shall be initiated against a confirmed demand in terms of an order which is contained in a tabulated chart which reads as follows: Sl.No Appellate Authority Situation Directions regarding recovery. 1 NIL No appeal filed against a confirmatory order in original against which appeal lies with Commissioner (Appeals). Recovery to be initiated after expiry of statutory period of 60 days for filing appeal. 2 Commissioner (Appeals) Appeal filed without stay application against a confirmatory order-in- original. Recovery to be initiated after such an appeal has been filed, without waiting for the statutory 60 days period to be exhausted. 3 Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere filing of an appeal does not operate as a stay or suspension of the order appealed against. 7. A brief reference at this stage to the relevant provisions of the Central Excise Act 1944 would be in order. Section 35 provides for an appeal to the Commissioner (Appeals) against an order passed by an officer lower in rank than a Commissioner of Central Excise. The period for the filing of an appeal is sixty days. The Commissioner (Appeals) is empowered to condone a delay of a further period of upto thirty days. Sub section (4A) of Section 35A requires the Commissioner (Appeals), where it is possible to do so, to hear and decide every appeal within a period of six months from the date on which it is filed. Section 35B governs appeals to the Tribunal and sub section (3) requires every such appeal to be filed within a period of three months from the date on which the order sought to be appealed is communicated to the party preferring the appeal. Sub section (4) allows cross-objections to be filed within a period of forty-five days of the receipt of a notice that an appeal has been preferred. Rule 15A of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules 1982 all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of sixty days for the filing of an appeal. The Petitioners in this batch of Petitions do not take exception either to Sr. Nos.1 or 2. In a situation where either no appeal is filed within the statutory period of sixty days or an appeal is filed without an application for stay, there can be no exception to the initiation of recovery proceedings. Similarly, the Petitioners do not take exception to Sr. Nos.4 and 5 and 7 and 8 of the table extracted above. Sr. Nos.4 and 5 deal with a situation where either no appeal is filed before the CESTAT against an order in original issued by the Commissioner or an appeal is filed without an application for stay. Sr. Nos.7 and 8 deal with a situation where a demand is confirmed for the first time by the Commissioner (Appeals) but either no appeal is filed against the order of the Commissioner (Appeals) or an application for stay is not filed with the appeal. In those situations, the Board has directed that recovery should be initiated after the expiry of the statutory period of ninety days for the filing of an appeal, despite which no appeal has been filed or on the filing of the appeal before the CESTAT where no stay application has been fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for stay within thirty days from the date of its filing". In regard to the Appellate Tribunal sub section (2A) of Section 35C was introduced by Amending Act 20 of 2002. Under the first proviso, it came to be stipulated that where an order of stay is made in any proceedings relating to an appeal filed under Section 35B(1), the Tribunal shall dispose of the appeal within a period of 180 days from the date of such order. The second proviso stipulated that if such an appeal is not disposed of within that period, the stay order shall on the expiry of that period stand vacated. Now the reason why the Appellate Tribunal may not be able to dispose of the appeal within a period of 180 days may have no bearing on the conduct of the assessee, but on the availability of sufficient judicial and administrative infrastructure for the disposal of appeals. Undoubtedly, in a given case the failure of a judicial body to dispose of the appeal expeditiously may be the consequence of dilatory tactics by the assessee, but that is not necessarily so. This issue was dealt with by the Supreme Court in a judgment in Commissioner of Customs and Central Excise, Ahmedabad v. Kumar Cotton Mills Pvt. Ltd. - 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. v. Union of India - 1998 (102) E.L.T. 542 (Del.). In that case also it was brought to the notice of the Division Bench by counsel appearing on behalf of the assessees and the Revenue that there was a heavy rush of appeals which rendered it humanly impossible for the Commissioner (Appeals) who had been unable to dispose of either the appeals or the applications for stay of recovery. Despite this action for recovery came to be initiated. 13. The decision of the Supreme Court and the situation which led to the decisions of the Delhi High Court and of this Court take due notice of the fact that the delay in the disposal of an appeal by an assessee or for that matter the delay in the disposal of a stay application may take place for reasons which lie outside the control of the assessee. Where the failure of the Appellate Authority to dispose of the appeal or the application for stay arises without any default on the part of the assessee, and without the assessee having resorted to any dilatory tactics, there would, in our view, be no reason or justification to penalize the assessee by recovering the demand in the meantime. Undoubtedly, where the assessee has been respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority. The circular stipulates that recovery has to be initiated immediately on the issue of the order in appeal. In a situation where the Commissioner (Appeals) has confirmed the demand made in the order of adjudication, the assessee is permitted by the provisions of Section 35F to move the Tribunal for a dispensation of the requirement of deposit. But the circular mandates that recovery shall be made immediately on the issue of an order in appeal implying thereby that recovery would be initiated without allowing the assessee, the time which is allowed by the statute for filing an appeal and for applying for a waiver of pre-deposit. Similarly, Sr. No.11 stipulates that where the Tribunal has confirmed the demand, a recovery would be initiated immediately on the issuance of the order of the Tribunal. The assessee is therefore deprived of even a reasonable period of time to move the High Court against the order of the Tribunal. In our view, the circular which is issued by the Board is in terrorem and its plain effect and consequence is to deprive the assessee of the remedy which is provided under the law of moving, as the case may be, the CESTAT, the High Court or the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the government to decide as to how long it should wait before a recovery of a confirmed demand should be initiated (it has now been decided by the circular dated 1 January 2013 that all past circulars should be rescinded). The Revenue has urged that under Section 35F a pre-deposit is mandatory with the filing of an appeal and an order of dispensation is by way of an exception. By the impugned circular, the field officers have been directed to proceed with recovery when there is no order of stay. This, it has been submitted, does not impinge upon the power of the Appellate Authority to grant a stay. The difficulty in accepting the defence which is submitted in the reply is that the Appellate Authorities, whether it be the Commissioner (Appeals) or the CESTAT are empowered to waive the requirement of a pre-deposit. An assessee who moves an application for waiver and is diligent in pursuing the application cannot be blamed for the inability of the appellate forum to dispose of the stay application. The reasons such as the absence of adequate infrastructure which lead to an accumulation of a backlog or the unavailability of the appellate officer or a duly constituted Bench of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onic form. A case information software has been adopted for the District judiciary including in the State of Maharashtra under the auspices of the National Informatics Center. Matters involving Revenue have large financial implications for the Union Government. The incorporation of electronic technology in the functioning of judicial and quasi-judicial authorities constituted under the Central Excise Act, 1944, the Customs Act, 1962 and cognate legislation would provide a measure of transparency and accountability in the functioning of the adjudicating officers, the appellate Commissioners as well as the Tribunal. But equally significant is the need to protect the interest of the Revenue which the adoption of electronic technology would also achieve. We are not unmindful of the fact that an application for stay may be kept pending for an indefinitely long period of time at the behest of an unscrupulous assessee and a willing administrative or quasi-judicial authority. This would be obviated by incorporating the requirement of disseminating and uploading the proceedings of judicial and quasi-judicial authorities under the Central Excise Act 1944 as well as the Customs Act 1962 in an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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