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TMI Blog2014 (10) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... & Shri S S Dabas, Adv., Shri J K Mittal, Adv. For the Respondent : Shri Govind Dixit, DR JUDGEMENT Per: G Raghuram: "Whether the third proviso to Section 35C(2A) of the Central Excise Act, 1944 disables CESTAT of the power to grant extension of stay beyond 365 days from the initial grant of an order of stay, notwithstanding that the delay in disposal of a appeal is occasioned not on account of any conduct of the appellant?" is the issue referred for consideration by this Bench, by the order dated 02.07.2014 in Misc. application No. 52111 of 2014 in ST Appeal No. 00097 of 2009. Later a few other appeals wherein misc. applications were filed seeking extension of orders of stay, on the ground that stay orders earlier granted stood vacated in view of the provisions of Section 35C(2A) of the Central Excise Act, 1944 (the Act), were also ordered to be placed before this Bench, as the same issue is involved in those applications as well. 2. Heard Dr. G. K. Sarkar, Sh. B. L. Narasimhan, Puneet Agarwal, Ajay Agarwal and other learned Counsel appearing for the several applicants, Sh. J.K. Mittal, ld. Counsel representing the Advocates association; and Shri Govind Dix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Narang Overseas (P) Limited vs. ITAT [(2007) 295 ITR 22] and of the Rajasthan High Court in Chote Lal Virendra Kumar Jain - 2014-TIOL-647-HC-RAJ-ST brought to the notice of the Tribunal, (to support the contention that the decisions in Ecom Gill Coffee Trading Pvt. Ltd. and Maruti Suzuki Limited, of the Karnataka and Delhi High Courts pronounced in the context of a provision of the Income Tax Act, 1961, do not govern interpretation of the true scope and effect of the third proviso to Section 35C(2A) of the Act), the referral order dated 02.07.2014 came to be passed. 6. Provisions of Section 35C and of 35F of the Act were amended by Finance Act, 2014, which received the assent of the President on 06.08.2014. Section 103 of this Act omitted the first, second and third provisos to sub -section 2A of Section 35C of the Act. Section 105 substituted the provisions of Section 35F. Accordingly, in respect of stay applications and appeals, presented subsequent to commencement of the Finance Act, 2014 there is enjoined the requirement of remittance of a specified percentage of duty, in case where duty or penalty or duty and penalty are in dispute, or penalty, where such penalty is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (No. 2) Act, 2014. Explanation. - For the purposes of this section "duty demanded" shall include, (i) amount determined under section 11D: (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules. 2002 or the Cenvat Credit Rules, 2004. " 7. Initially Shri J. K. Mittal contended that in view of amendments to Sections 35C and 35F of the Act, (by the Finance Act, 2014), the issue referred for consideration by the Larger Bench, no longer survives. The contention in this behalf was that since the three provisos to Section 35C(2A) stand omitted w.e.f. 06.08.2014, the sunset provisions, enjoining vacation of a stay order granted by the Tribunal are currently not in force; consequently where a stay order was granted by CESTAT (after a waiver of pre-deposit with or without conditions), such stay would operate proprio - vigore during the pendency of the appeal. On further reflection however Shri J.K. Mittal did not pursue with this lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given by the inferior Court; to disturb an existing right of appeal is not a mere alteration in procedure and such vested right cannot be taken away except by express enactment or necessary intendment. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication. Counsel also referred to the judgment of the Delhi High Court dated 08.05.2013 in M/s Bajaj Overseas Impex vs. Special Commissioner-I and Anr [2013] 62 VST 397 (Del). 9. The above decisions were also relied upon in support of the contention that the third proviso to Section 35C(2A) is inapplicable to appeals involving causes of action which arose prior to 10.05.2013 (the date of enactment of this proviso). It is contended that in respect of appeals arising out of causes of action which arose prior to 10.05.2013, only the first and second proviso to Section 35C(2A) would apply and consequently the decision of the Supreme Court in Kumar Cotton Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of 365 days, even where the delay in disposing of an appeal is not attributable to an assessee, as that is the clear intendment of the third proviso. 12. The Delhi High Court in Maruti Suzuki (India) Ltd. reiterated the same position, again while considering the same provision of the Income Tax Act. The Delhi High Court observed: However, the Legislature in view of the said judgment and keeping in view the language of the existing provisions and the reasoning given in the said judgments has specifically introduced and added the words "not attributable to the assessee". This amendment / substitution made to the third proviso is significant. The said words are not redundant or inconsequential and in fact have been added in view of the ratio and the reasoning given in the aforesaid two decisions. This clearly underscores and highlights the intention of the Legislature. 13. In Chote Lal Virendra Kumar Jain the scope of the third proviso to Section 35C(2A) of the Act was in issue. In the facts of this case, the assessee preferred an appeal to the Tribunal against an adjudication order dated 21.02.2012 confirming the liability to service tax, interest and penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Accordingly we find that in the present case, the Tribunal has considered the application filed by the respondent / assessee and has given a reason for grant of extension of interim order by holding that the Tribunal is granting the extension of interim order only on the ground that the Tribunal is unable to dispose of the appeal in time due to huge pendency of appeals before the Tribunal. When the appellate authority itself clearly concedes the fact that the delay is not on account of the respondent / assessee, the Tribunal has rightly relied upon the decision of the Supreme Court in Kumar Cotton Mills case (supra) and we find no reason to differ with the said stand taken by the Tribunal in granting extension of the interim order by relying on the said judgment. 15. Whether CESTAT could grant extension of stay beyond the sunset period set out in the second proviso to Section 35C(2A) of the Act was considered by the Gujarat High Court in Poly Fill Sacks vs. Union of India - 2005-TIOL-233-HC-AHM-CX and by the Punjab High Court in PML Industries Limited vs. Commissioner of Central Excise 2013 (290) ELT 3 (P&H). Quoting with approval the judgment in Kumar Cotton Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by the Karnataka High Court. If para-materia and/or similar provision is interpreted by the Hon'ble Supreme Court, the same is binding to the High Court and interpretation of para-materia provisions can be applied even with respect to other similar para-materia provisions in another statute. Under the circumstances, we are not in agreement with the view taken by the Karnataka High Court in the case of M/s Ecom Grill Coffee Trading Pvt Ltd. (supra) and we are in agreement with the view taken by the Bombay High Court in the case of Navrang Overseas Pvt Ltd. (supra). 17. The conclusion of the Gujarat High Court is set out in para 6 of the judgment, which reads: 6. In view of the above and for the reasons stated above, question No. 1 is answered against the revenue and in favour of the assessee and it is held that in case and having satisfied that delay in not disposing of the appeal within 365 days (total) from the date of grant of initial stay is not attributable to the appellant / assessee in whose favour stay has been granted and that the Appellate Tribunal is satisfied that such appellant/ assessee has fully cooperated in early disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal must and shall give priority to the appeals in which stay has been granted, continued and/or extended. 18. The above decision and the ratio therein were quoted with approval by the Gujarat High Court in CCE vs. Disha Engineers - 2014-TIOL-1410-HC-AHM-CX and in CCE, Ahmedabad-I vs. Sharp Engineers - 2014-TIOL-1250-HC-AHM-CX. 19. Learned AR has referred to the decision of the Bombay High Court in Shri Jethmal Faujimal Soni vs. Income Tax Appellate Tribunal, Pune & Others - 2010-TIOL-258-HC-MUM-IT and the unreported judgment of the Allahabad High Court dated 01.07.2014 in Writ Tax No 375 of 2014 in Ms Garg Industries vs. Union of India and Ors. The judgment of the Bombay High Court was in the context of the third proviso to Section 254(2A) of the Income Tax Act. The Allahabad High Court judgment in M/s Garg Industries was however in the context of the powers under the third proviso to sub-section (2A) of Section 35C of the Act. The Allahabad judgment noticed that in the facts before it there was no negligence/default/ wrongful conduct on the part of the petitioner/ assessee. On behalf of Revenue it was urged that the petitioner should have applied to CESTAT either for listing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; However, the Legislature in view of the said judgment and keeping in new the language of the existing provisions and the reasoning given in the said judgments has specifically introduced and added the words "not attributable to the assessee". This amendment/ substitution made to the third proviso is significant. The said words are not redundant or inconsequential and in fact have been added in view of the ratio and the reasoning given in the aforesaid two decisions. This clearly underscores and highlights the intention of the Legislature. (emphasis is added). 20. In the light of the analyses above and following the judgment of the Gujarat High Court in Small Industries Development Bank of India, reiterated in Disha Engineers and Sharp Engineers, we answer the reference by holding that even in a case where the period of 365 days has passed from the date of initial grant of stay but the appeal could not be disposed of for reasons not attributable to the appellant/ assessee (in whose favour the stay was granted); ana where the Tribunal is satisfied that the appellant/ assessee was ready and willing for disposal of the appeal and/ or had not indulged in any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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