2012 (5) TMI 154 - HC - Central Excise

High Court instructs Tribunal on disputed facts & appeals, interim stay continues, rebate claims as interim measures

The High Court directed the parties to approach the Tribunal to resolve disputed facts and decide the appeals. The interim stay granted by the High Court ... Adjustment of refund claim (rebate claim on export of goods) with demand stayed by the CESTAT - held that:- In the instant case, though the Tribunal was not even in session, by way of abundant caution, the petitioner has filed applications before the Tribunal seeking extension of stay already granted on 09.05.2011, which was due to expire on 09.11.2011, but, the said applications were not taken up due to non-availability of the Bench. Of course, on the expiry of stay, the respondent was empowered to act upon the impugned proceedings, but, at the same time, it was incumbent on his part to keep in mind the non-availability of the Tribunal and maintain status quo until further orders, but not to take advantage of the expiry of stay and no extension thereof, which were wholly due to non- availability of the quorum. The Tribunal shall decide the appeals on their own merits, untrammelled by any of the observations made in this order. It is needless to mention that until the appeals are taken up by the Tribunal, the interim stay, already granted by this Court on 25.11.2011, shall continue. Power of the courts in exceptional circumstances - held that:- The court may in such cases bend the rules of procedure if no specific provision of law or rule of fair play is violated for it would promote substantial justice provided that there is absence of other disentitling factors or just circumstances. Issues Involved:1. Demand for payment of dues.2. Appropriation of sanctioned rebate amount towards outstanding arrears.3. Legality of the respondent's actions in appropriating amounts and demanding dues during the pendency of appeals before CESTAT.4. Jurisdiction of the High Court under Article 226 to address disputed facts.5. Interim measures and stay orders during non-functioning of the Tribunal.Detailed Analysis:1. Demand for Payment of Dues:The respondent issued orders demanding the petitioner to pay outstanding dues. The petitioner contested these demands, arguing that the amounts were already subject to appeals pending before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The Tribunal had previously granted a stay on the recovery of these amounts, but the respondent claimed the stay had expired and demanded payment.2. Appropriation of Sanctioned Rebate Amount Towards Outstanding Arrears:The petitioner was eligible for rebates on duty paid for exports, which were sanctioned by the Department. However, the respondent appropriated these sanctioned rebate amounts towards the outstanding arrears that were under dispute in the appeals before CESTAT. The petitioner argued that this action was arbitrary and illegal, especially as the appeals were still pending and the stay orders had not been vacated.3. Legality of the Respondent's Actions:The petitioner cited several judicial precedents to argue that the respondent's actions were illegal. The key cases referenced included:- Commissioner of Customs & Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd.: This case emphasized that the Tribunal could extend the stay orders if the delays were not attributable to the assessee.- ISPAT Industries Ltd. vs. Commissioner of Central Excise, RAIGAD: It was held that recovering disputed amounts during the pendency of stay applications was an abuse of the Tribunal's process.- Ranbaxy Laboratories Ltd. vs. Union of India: This case clarified that interest on refunds becomes payable if the refund is not made within three months from the date of the refund application.- Commissioner of Central Excise, Banagalore - III vs. Stella Rubber Works (Unit-II): This case dealt with the revenue's power to adjust amounts due to the revenue against amounts due to the assessee by way of rebate.The respondent countered by citing cases that supported the view that the Department could take coercive measures to recover dues even during the pendency of appeals, provided the statutory conditions were met.4. Jurisdiction of the High Court under Article 226:The High Court noted that the issues involved disputed questions of fact that were more appropriately addressed by the Tribunal. The Court emphasized that its extraordinary jurisdiction under Article 226 of the Constitution of India should not be exercised to resolve such factual disputes, especially when the petitioner had already filed appeals before the Tribunal.5. Interim Measures and Stay Orders:Given the non-functioning of the Tribunal, the High Court had granted interim stay orders to prevent the respondent from taking coercive measures against the petitioner. The Court maintained that the respondent should have considered the non-availability of the Tribunal and refrained from taking advantage of the situation by appropriating the rebate amounts and demanding payment of dues.Conclusion:The High Court directed the parties to approach the Tribunal to resolve the disputed questions of fact and to decide the appeals on their merits. The interim stay granted by the High Court would continue until the Tribunal took up the appeals. The rebate claims disbursed to the petitioner were to be treated as an interim measure, subject to the outcome of the appeals. The Tribunal was instructed to decide the appeals independently, without being influenced by the observations made in the High Court's order.