Coercive recovery barred during pending stay application before appellate forum, as specific circular did not override general recovery restraint.

A departmental circular dealing specifically with stay applications before the Commissioner (Appeals) was held not to override an earlier general instruction that barred coercive recovery while a stay or waiver application remained pending before the appellate authority. The later circular was treated as clarificatory and confined to proceedings before the Commissioner (Appeals), so it could not be read as permitting recovery during pendency of a stay application before CEGAT. On that reading, recovery action taken before disposal of the stay application was unsustainable, and the recovery notice and instruction were invalid.

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Issues: Whether the departmental authorities could initiate coercive recovery of central excise dues while the assessee's stay application before CEGAT remained pending, and whether the circular dated 02-06-1998 could be read as limiting the earlier general instruction dated 02-03-1990.

Analysis: The earlier circular laid down a general policy that recovery officers should not proceed coercively while an application for stay of the impugned demand or waiver of pre-deposit was pending before the appellate authority. The later circular dealt with the specific situation of stay applications before the Commissioner (Appeals) and introduced a time frame for disposal of such applications. Read in context, the later circular was held to be clarificatory and specific to proceedings before the Commissioner (Appeals), and not a supersession of the earlier general instruction applicable to higher appellate forums. The Court held that the additional commissioner had misconceived the scope of the later circular by treating it as authorising recovery during pendency of stay applications before CEGAT.

Conclusion: Coercive recovery could not be made while the stay application before CEGAT was pending, and the impugned recovery notice and instruction were unsustainable.

Ratio Decidendi: A specific departmental circular dealing with stay applications before one appellate forum does not override a general instruction prohibiting coercive recovery during the pendency of stay proceedings before other appellate forums; recovery must await disposal of the stay application unless the applicable circular or law expressly provides otherwise.

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