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TMI Blog2013 (4) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... cases on board and seek interim orders. The situation is beyond the control of the writ petitioners/assessees and they were not responsible for the delay in prosecuting the matter.Insofar as the Commissioner (Appeals) is concerned, it is to be noticed and it is fairly conceded by the learned Standing Counsel for the respondents that large number of appeals and stay petitions are pending and dates have been given. Therefore, the petitioners are not at fault - In no case there is a breach alleged on the part of the petitioners herein -The time limit specified in the circular/instruction insofar as it relates to appeals filed along with stay/waiver application is concerned should be interpreted in such a manner that it should not cause hardship to the genuine assessee In such situation, the Court has no hesitation to hold that the respondent/department should refrain from proceeding further in the recovery proceedings pending disposal of the stay/waiver application before the Commissioner (Appeals) or the Tribunal, as the case may be - However, with a rider that each one of the petitioners shall inform the respondent/department the stage of the pending applications for stay/waiver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters and directions regarding the manner in which recovery of duty, penalty, etc. in pending proceedings or where no appeal is filed against final order on adjudication in different fora. 8. The Circular dated 1.1.2013, which is the issue for consideration, reads as under: "Circular No.967/01/2013-CX F.No.208/36/2012-CX.6 Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs, New Delhi New Delhi, the Dated 1st January, 2013 To, (i) The Chief Commissioner of Central Excise (All), (ii)The Chief Commissioner of Central Excise Customs (All) (iii)The Chief Commissioner of Customs (All), (iv)Directors General (All) Madam/Sir, Subject: Recovery of confirmed demand during pendency of stay application regarding. I am directed to bring your attention to the following circulars issued from time to time on the above issue and to state that it has been decided to rescind these circulars with immediate effect. Sl.No. Date Circular No. and File number of CX-6 1 18-11-88 80/88 and 208/31/88 2 2-3-90 7/90 and 208/107/89 3 21-12-90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 CESTAT Appeal filed without stay application against an Order in Appeal confirming the demand for the first time. without waiting for the statutory 90 days period to be exhausted. Recovery to be initiated on filing of such an appeal in the CESTAT, 9 CESTAT Appeal filed with a stay application against to be an Order in Appeal confirming the demand for the first time. Recovery initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier. 10 CESTAT All cases where Commissioner (Appeals) confirms demand in the Order in original. Recovery to be initiated immediately on the issue of Order in Appeal. 11 High Court or Supreme Court Tribunal or High Court confirms the to be demand. Recovery initiated immediately on the issue of order by the Tribunal or the High Court, if no stay is in operation. 3) It may be noted that a confirmed demand remains an order in operation till it is stayed. Mere preferment of appeal itself does not operate as a stay. Hon ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of a specific order against the same. (A copy of opinion given by Ministry of Law is enclosed).(Not Printed). 3. The Board has accepted the Law Ministry's advice. In view of this there is no need to review Board's Instructions dated 26-8-1986 referred to above. 4. This may be brought to the notice of the field formations. (This disposes of Collector of Central Excise, Bombay's D.O. No. V (Ch. 24) 17/HLC/1988, dated April, 88 and Collector of Central Excise, Calcutta-II's letter F. No. C. No. IV (16) 30-CE/PRO/WB/80/, dt. 17-6-1988)." (b) Circular No.7/90-CX.6, dated 2.3.1990 "Circular No.7/90-CX.6, dated 2.3.1990 [From F.No.208/107/89-CX.6] Government of India Central Board of Excise Customs New Delhi Subject : Central Excise - Recovery of dues during pendency of stay petition/application - Regarding Reference instructions issued by the Ministry vide F. No. 208/31/88-CX.6, dated 18th November 1988 (Circular No. 80/88-CX.6) on the subject mentioned above. Suggestions for enhancing the waiting period from the present 3 months as laid down under the above instructions to 5 months before initiating coercive measures for recovery of Central Excise du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of recovery of dues during pendency of stay petition/application, the matter was examined by the Board in the recent past and necessary instructions vide Cir.F.No.208/107/90-CX.6, dated 21-12-1990 were issued in this regard. According to these instructions, the Central Excise Officers are to allow a period of three months from the date of decision for payment of the dues adjudged before resorting to coercive measures to recover such dues. However if a stay application of the assessee is rejected by the Appellate Authority even before the lapse of the time of three months, recovery proceedings should be initiated immediately. While coming to the said period of three months it was expected that the assessee should be in a position to file appeal within one month and the Appellate Authority to dispose of the same within another 2 months. 3. The issue has further been examined by the Board. The Board is of the view that it is not desirable to revise the above-mentioned instructions in the matter and provide for a blanket stay order for not taking coercive measures as pleaded by the Confederation of Indian Industries. If the assessee is deligent, as the things stand today, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12.12.1990 issued from F.No.209/ 107/89-CX.6 and Circular No.16/92-CX.6 dated 12.11.1992 issued from F.No.208/59/92-CX.6. According to these instructions, Central Excise Officers were to allow a period of three months from the date of decision for payment of dues adjudicated before resorting to coercive measures to recover such dues. However, if the stay application is rejected by the Commissioner (Appeal) even before the lapse of time of three months, recovery proceedings should be initiated immediately. The Commissioner (Appeals) were also directed to dispose of stay application within the period of two months in case the Commissioner (Appeal) was not in a position to dispose of the main appeal within the same time-frame. 2. Recently, the Bombay High Court has ordered that Commissioner (Appeals) may be directed to dispose of stay application within the specified time limit and during the pendency of stay application no coercive action should be taken to realise the arrears of revenue. 3. Keeping the aforesaid in view, the Board has decided that no coercive action should be taken to realise the dues till the disposal of the stay application by the Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce has been considering the issue of limiting the period required for initiating recovery of the duty, based on adjudication orders pending the appeals or pending applications for waiver/stay. As is evident from the circulars mentioned above, the Department of Revenue has specified different periods as relevant to initiate action for recovery. It is in this background that the present circular came to be issued on 1.1.2013 in a consolidated form rescinding the earlier circulars. In these cases, we are concerned only with appeals that are filed along with stay/waiver applications. All other cases where no appeal is filed or where no application for stay/waiver is filed, there is no cause for quarrel. The Officers are at liberty to proceed for recovery as per law. 12. The Ministry of Finance, Department of Revenue, being conscious of the fact that certain period of time has to be given to the assessee to obtain interim orders from the appellate forum, directed the authorities that coercive action should not be taken as a matter of course. In paragraph (9) of this order, all the earlier circulars have been extracted and the relevant portions have been highlighted. i. In Circular N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board : Provided that no such orders, instructions or directions shall be issued. (a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner of Central Excise (Appeals) in the exercise of his appellate functions." Similarly, under the Customs Act, 1962, Section 151-A reads as under: "Section 151-A. Instructions to officers of customs. The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon, or for the imple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal matters, consistent with the provisions of the Act and these rules." 16. It is, therefore, clear that in exercise of such general power of superintendence and in order to ensure the effective functioning of the Departments of Excise and Customs, such circulars have been issued from time to time guiding the officers as to how they should proceed in matters relating to recovery of tax, duties and other amounts that are payable by the assessees or the importers, as the case may be, who have suffered adverse orders of adjudication before original authority or appellate authority. The present circular can therefore be at best termed as instructions by the Board. At best it is persuasive in character. Consequently, it is directory in nature and not mandatory. 17. Since the present issue which has been narrowed down relates to recovery proceedings pending appeal, the relevant provisions that relate to appeal and interlocutory orders have to be considered. Some of the provisions of the Central Excise Act, 1944, which are relevant for disposal of these writ petitions are as follows: "Section 35. Appeals to Commissioner (Appeals).- (1) Any person aggrieved by any decision or ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the liability of the other party, shall not be made under this sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard. (2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed: Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. (3) The Appellate Tribunal shall send a copy of every order passed under this section to the Commissioner of Central Excise and the other party to the appeal. (4) Save as provided in the National Tax Tribunal Act, 2005, orders passed by the Appellate Tribunal on appeal shall be final." "Section 35-F. Deposit, pending appeal of duty demanded or penalty levied. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch conditions that the Appellate Authority may deem fit to impose so as to safeguard the interest of the Revenue. The proviso to Section 35-F of the Central Excise Act and proviso to Section 129-E of the Customs Act, 1962 apparently is balanced in its approach. While considering the undue hardship of the person who files the appeal before the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, it may impose such conditions while dispensing with the pre-deposit pending appeal after taking into consideration the interest of the Revenue. The Central Excise Act as well as the Customs Act provide for a check and balance between the claim of the assessee and the interest of the Revenue. This should not be lost sight of while considering the present issue and the scope of the circular/instruction. 20. If the circular attempts to defeat the object of Section 35-F of the Central Excise Act and Section 129-E of the Customs Act in whatever manner, it cannot be justified, as it would amount to overreaching the provisions of the respective Acts. Both in the Central Excise Act and the Customs Act time limit has been specified for filing appeal and if stay/waiver application i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of the appeal, if no stay/waiver is granted. This plea if it is based on a bona fide claim pending appeal, justifies the petitioners plea that the circular is issued in terrorem. 23. The petitioners are aggrieved by a portion of the instruction in Serial Nos.3, 6, 9 and 10. The words "if no stay is granted" and "whichever is earlier" used in the said clauses give the department a right to proceed and take coercive steps after the time limit of 30 days. If the stay/waiver application is not taken up for disposal by the Appellate Authority for one reason or the other, still then the authority will proceed for recovery quoting the above circular/instruction. This apparently appears to be arbitrary as is evident from the situation that prevails before the appellate forum. 24. The learned counsel for many of the writ petitioners brought to the notice of this Court the peculiar circumstances prevailing before the Commissioner (Appeals) both under the Customs Act and the Central Excise Act and also before the CESTAT by referring to a letter dated 1.11.2012 addressed to the Hon'ble Finance Minister by the Indirect Taxes Bar Association which reads as follows: "Sub: Request to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n considered or decided. The inability on the part of the assessees to obtain interim orders is not on account of any delay or inaction on their part, but only due to the administrative difficulties expressed by the Office of the Commissioner (Appeals) and also due to the non functioning of the Tribunal with its full complement of members for a substantial period of time. 26. Placing before this Court the peculiar situation as above, the learned counsel for the petitioners plead that in the absence of early disposal of the stay/waiver applications by the Commissioner (Appeals) even as per the mandate of the provisions of the Customs Act and the Central Excise Act and also due to the non availability of members of the Tribunal which is causing a huge backlog, the petitioners/assessees should not be made to suffer by way of recovery proceedings based on the impugned circular/ instruction. 27. As was stated earlier, even if it is a circular issued under Section 37-B of the Central Excise Act, 1944 or Section 151-A of the Customs Act, 1962, Courts have repeatedly held that such circulars are more in the nature of guidance to the field formations and cannot bind the Court or the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensuring proper administration of the statute, they are designed to mitigate the rigours of the application of a particular provision of the statute in certain situations by applying a beneficial interpretation to the provision in question so as to benefit the assessee and make the application of the fiscal provision, in the present case, in consonance with the concept of income and in particular, notional income as also the treatment of such notional income under accounting practice." (emphasis supplied) The above said case pertains to a circular issued under the provisions of the Income Tax Act which is analogous to Section 37-B of the Central Excise Act, 1944 and Section 151-A of the Customs Act, 1962. 30. On going through these provisions, it is clear that the present circular/instruction, which though not relatable to Section 37-B of the Central Excise Act, 1944 or Section 151-A of the Customs Act, 1962 can at best be taken as an instruction to the field formations to initiate proceedings for recovery of revenue dues which the assessee or the importer has failed to pay having suffered an order passed by the adjudicating authority and is pending in appeal before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery. All that it stated is that mere filing of appeal is no stay of proceedings. There is no dispute on this either side. 33. There can be no quarrel if the Commissioner (Appeals) decides the stay/waiver applications as per the proviso to Section 35-F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962 preferably by the time limit; or if the Tribunal decides the stay/waiver application within the time limit specified in the circular. But in the absence of proper functioning of the Tribunal due to non availability of members and when the Commissioner (Appeals) does not provide dates for hearing of the stay/waiver application within the time specified, it is not clear as to how the petitioners/ assessees can be found fault with. The Department cannot, under this circular, take away the substantial right granted under the statue to the petitioners/assessees. The difficulty expressed by the petitioners is amplified in the Apex Court decision in Commissioner of Customs and Central Excise, Ahmedabad v. Kumar Cotton Mills Private Ltd., 2005 (180) ELT 434 (SC). 34. In cases where no appeal is filed or appeal filed without stay application, there can be no disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. Once an appeal is filed before the Commissioner (Appeals), the filing of the appeal must be recorded through an entry made in the electronic form. Every appellant, including the assessee must indicate, when an appeal is filed, an email ID for service of summons and intimation of dates of hearing. The Commissioner (Appeals) must schedule the hearing of stay applications and provide dates for the hearing of those applications which must be published in the electronic form on the website. The order sheets or roznamas of every case must be duly uploaded on the website to enable both the officers of the Revenue and assessees to have access to the orders that have been passed and to the scheduled dates of hearing. We would also commend to the Union Ministry of Finance the urgent need to introduce electronic software that would ensure that the orders and proceedings of the CESTAT are duly compiled, collated and published in the electronic 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 Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er reasons. The time limit specified in the circular/instruction insofar as it relates to appeals filed along with stay/waiver application is concerned should be interpreted in such a manner that it should not cause hardship to the genuine assessee, who has proceeded to file appeal along with stay/waiver application. If no order is passed in the stay/waiver application by the Commissioner (Appeals) or the Tribunal for some reason not attributable to the assessee, the authorities shall refrain from initiating coercive action. The circular/instruction stands clarified as above. The assessee is also required to show to the authorities that he is diligent in prosecuting the appeal along with the stay/waiver application. 37. The circular/instruction is accordingly clarified to state that while there is a power to initiate recovery proceedings on an erring assessee, the department should refrain from taking coercive steps if due diligence is shown by the assessee in prosecuting the appeal and the stay/waiver application. In all these cases, it is shown that appeals are pending before the Commissioner (Appeals) or the Tribunal, as the case may be, and insofar as the Tribunal is concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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