2006 (1) TMI 144 - HC - Central Excise

Court dismisses writ petition against recovery of Central Excise Duty, upholding Tribunal order. Compliance with tribunal decisions stressed.

The court dismissed the writ petition seeking to restrain the recovery of arrears of Central Excise Duty based on a Tribunal's order. The court held that ... Validity of demand in absence of stay - Effect of ex parte appellate order not served - Maintainability of writ of mandamus to restrain revenue collectionValidity of demand in absence of stay - Maintainability of writ of mandamus to restrain revenue collection - Demand for recovery of arrears of Central Excise duty raised pursuant to a tribunal order is lawful where there is no stay on the order. - HELD THAT: - The Tribunal allowed the appeal filed by the Commissioner and set aside the earlier order, thereby fixing liability to pay duty. The court found that in the absence of any stay against the tribunal's order, the revenue is entitled to raise a demand and proceed with recovery. Consequently, a writ of mandamus forbidding collection could not be granted because the respondent acted on a valid adjudicatory order and there was no legal impediment (stay) preventing recovery. [Paras 3]The writ petition seeking to restrain collection of the demand is dismissed; the demand raised in pursuance of the Tribunal's order is lawful in absence of a stay.Effect of ex parte appellate order not served - Right to challenge ex parte order by setting aside application - Non-receipt of the tribunal's order by the petitioner and pendency of an application to set aside an ex parte order do not, by themselves, bar the revenue from issuing a demand when no stay has been granted. - HELD THAT: - The petitioner contended non-service of the tribunal's ex parte order and that an application to set it aside was pending. The court held this contention untenable as a basis to restrain recovery because the operative effect of the tribunal's order remains unless stayed. Pendency of a set-aside application does not automatically suspend the obligation to pay; absent an express stay, the revenue may lawfully demand payment. [Paras 3]The petitioner's plea of non-service and a pending set-aside application does not prevent issuance of the demand; relief is refused.Final Conclusion: The writ petition seeking to restrain recovery of Central Excise duty was dismissed; the respondent was entitled to raise the demand under the Tribunal's order in the absence of any stay, and the petitioner's contentions of non-service and a pending application to set aside the order did not justify interference. Issues:1. Writ petition to restrain recovery of arrears of Central Excise Duty.2. Validity of demand raised based on Tribunal's order.3. Contention regarding ex parte nature of Tribunal's order and demand notice.Analysis:1. The writ petition was filed to prevent the first respondent from collecting arrears of Central Excise Duty as per a communication dated 24-11-2005 by the Deputy Commissioner of Central Excise, confirmed by the Customs Excise and Service Tax Appellate Tribunal in final order No. 825/05 dated 9-6-2005. The petitioner sought a writ of Mandamus against this recovery.2. The Customs, Excise and Service Tax Appellate Tribunal, Chennai, allowed the appeal by the Commissioner of Central Excise against a previous order. Subsequently, the first respondent issued a demand on the petitioner based on this Tribunal's order. The petitioner argued that the Tribunal's order was ex parte, and they were unaware of it until receiving a demand notice. However, the court held that since there was no stay against the Tribunal's order, the first respondent was within their rights to demand payment of the duty. The court deemed the demand legal and denied the petitioner's contention to restrain it.3. The petitioner claimed that the Tribunal's order was ex parte, and they had an application pending to set it aside. They argued that the demand notice should not have been issued while the application was pending. The court found this argument untenable, stating that the liability to pay the duty was established by the Tribunal's order, and in the absence of a stay, the first respondent had the right to demand payment. As the petitioner failed to make a case for the writ, the court dismissed the petition and closed the connected application.This judgment clarifies the legal principles regarding the enforcement of Tribunal orders and the entitlement of authorities to demand payment of duties in the absence of a stay order. It emphasizes the importance of complying with tribunal decisions and the limited grounds on which recovery actions can be restrained through writ petitions.