2007 (7) TMI 558 - AT - Central Excise

Tribunal Grants Stay on Recovery Actions Pending Clearance: Key Precedents Upheld

The Tribunal dismissed the appellant's stay application and appeal due to delayed COD clearance but allowed restoration upon obtaining clearance. Despite ... Recovery of sums due to Government Issues:1. Stay application and appeal dismissal due to delayed COD clearance.2. Department's inclination to take coercive action for payment.3. Application of Hon'ble Supreme Court's judgment in ONGC case.4. Granting of interim suspension of the order impugned.Issue 1: Stay application and appeal dismissal due to delayed COD clearanceThe appellant, a Public Sector Undertaking, applied for COD clearance with the High Power Committee. However, as the proceedings were pending and the COD clearance delayed, the stay application and appeal filed by the appellant were dismissed. The dismissal came with a liberty to seek restoration of the same once the COD clearance is obtained. The Tribunal noted that the matter was still pending with the High Power Committee for COD clearance.Issue 2: Department's inclination to take coercive action for paymentDespite the pending COD clearance, the Department indicated an inclination to take coercive steps against the appellant for payment of the confirmed demand by a specified target date. The Department intended to take action under Section 11 of the Central Excise Act if the payment was not made by the given date. However, the Tribunal found the recovery of the confirmed demand unwarranted in light of the pending COD application and the guidelines established by the Hon'ble Supreme Court.Issue 3: Application of Hon'ble Supreme Court's judgment in ONGC caseThe Tribunal referenced the Hon'ble Supreme Court's judgment in the ONGC case, where it was established that no coercive action should be taken against a unit when proceedings are under challenge or the order is suspended pending consideration of COD clearance by the High Power Committee. The Tribunal held that the recovery of the confirmed demand was not justified based on these guidelines and the Department's knowledge of the same.Issue 4: Granting of interim suspension of the order impugnedConsidering the circumstances and the guidelines set forth by the Hon'ble Supreme Court, the Tribunal granted interim suspension of the impugned order. The Commissioner was directed not to initiate any action or take steps to recover the demand until the COD application was decided by the High Power Committee or until further orders were passed by the Tribunal. The application for interim suspension was allowed accordingly.This judgment highlights the importance of considering the status of pending clearances and the applicability of legal precedents in determining the validity of recovery actions by government departments in cases involving delayed administrative processes.