TaxTMI 
TaxTMI 
2013 (4) TMI 250
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.... disposal of the stay applications pending before the Commissioner of Central Excise (Appeals). 5. The writ petitions in W.P.Nos.1549, 1592, 1877 of 2013 are filed challenging the recovery notices issued pending disposal of the stay applications pending before the Customs, Excise and Service Tax Appellate Tribunal (for brevity, "the CESTAT"). 6. The writ petition in W.P.Nos.1735 of 2013 is filed challenging the recovery notice issued pending disposal of the stay applications pending before the Commissioner of Central Excise (Appeals) and the CESTAT. 7. All these writ petitions are filed either challenging the Circular No.967/01/2013-CX, dated 1.1.2013 issued by the Central Board of Excise and Customs or the tax/penalty recovery notices issued on the basis of the said circular. The circular prescribes certain parameters and directions regarding the manner in which recovery of duty, penalty, etc. in pending proceedings or where no appeal is filed against final order on adjudication in different fora. 8. The Circular dated 1.1.2013, which is the issue for consideration, reads as under: "Circular No.967/01/2013-CX F.No.208/36/2012-CX.6 Government of India Ministry of Finance D....
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....th a stay application against an Order in Original issued by the Commissioner. Recovery to be initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier. 7 NIL No appeal filed against an Order in Appeal issued by a Commissioner (Appeals) confirming the demand for the first time. Recovery to be initiated after expiry of statutory period of 90 days for filing appeal from the date of communication of order. 8 CESTAT Appeal filed without stay application against an Order in Appeal confirming the demand for the first time. without waiting for the statutory 90 days period to be exhausted. Recovery to be initiated on filing of such an appeal in the CESTAT, 9 CESTAT Appeal filed with a stay application against to be an Order in Appeal confirming the demand for the first time. Recovery initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier. 10 CESTAT All cases where Commissioner (Appeals) confirms demand in the Order in original. Reco....
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.... that the Department is within its right to proceed with the recovery proceedings after waiting for decision on the stay application for a reasonable period, which would depend on the facts and circumstance of a particular case. The observations made by some High Courts and the CEGAT would not change the legal position that mere pendency of a stay application cannot be a legal bar to proceed with recovery proceedings, in the absence of a specific order against the same. (A copy of opinion given by Ministry of Law is enclosed).(Not Printed). 3. The Board has accepted the Law Ministry's advice. In view of this there is no need to review Board's Instructions dated 26-8-1986 referred to above. 4. This may be brought to the notice of the field formations. (This disposes of Collector of Central Excise, Bombay's D.O. No. V (Ch. 24) 17/HLC/1988, dated April, 88 and Collector of Central Excise, Calcutta-II's letter F. No. C. No. IV (16) 30-CE/PRO/WB/80/, dt. 17-6-1988)." (b) Circular No.7/90-CX.6, dated 2.3.1990 "Circular No.7/90-CX.6, dated 2.3.1990 [From F.No.208/107/89-CX.6] Government of India Central Board of Excise & Customs New Delhi Subject : Central Excise - Recovery of du....
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..... During the course of discussions in the National Workshop on Customs organised by the Confederation of Indian Industries on 2-9-1992, a point was raised that the Departmental officers should not take coercive measures to recover the duty demanded as a result of adjudication till such time as the appeal filed by the appellant has been disposed of by the Collector (Appeals). 2. On the question of recovery of dues during pendency of stay petition/application, the matter was examined by the Board in the recent past and necessary instructions vide Cir.F.No.208/107/90-CX.6, dated 21-12-1990 were issued in this regard. According to these instructions, the Central Excise Officers are to allow a period of three months from the date of decision for payment of the dues adjudged before resorting to coercive measures to recover such dues. However if a stay application of the assessee is rejected by the Appellate Authority even before the lapse of the time of three months, recovery proceedings should be initiated immediately. While coming to the said period of three months it was expected that the assessee should be in a position to file appeal within one month and the Appellate Authority to....
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....esult of adjudication till such time as the appeal/ stay applications filed by the appellant has been disposed of by Commissioner (Appeals) be taken- Regarding. On the question of recovery of dues during pendency of stay application before the Commissioner (Appeal), the matter was examined by the Board and necessary instructions were issued vide Circular No.23/90-CX.6 dated 12.12.1990 issued from F.No.209/ 107/89-CX.6 and Circular No.16/92-CX.6 dated 12.11.1992 issued from F.No.208/59/92-CX.6. According to these instructions, Central Excise Officers were to allow a period of three months from the date of decision for payment of dues adjudicated before resorting to coercive measures to recover such dues. However, if the stay application is rejected by the Commissioner (Appeal) even before the lapse of time of three months, recovery proceedings should be initiated immediately. The Commissioner (Appeals) were also directed to dispose of stay application within the period of two months in case the Commissioner (Appeal) was not in a position to dispose of the main appeal within the same time-frame. 2. Recently, the Bombay High Court has ordered that Commissioner (Appeals) may be direc....
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....e instructions in this clause relate to only stay application filed with first stage appeals not to those with further appeals i.e. only in respect of stay applications filed with appeals filed against the Orders-In Original of the Commissioners." (emphasis supplied) 11. From a reading of the above circulars, it is clear that the Ministry of Finance has been considering the issue of limiting the period required for initiating recovery of the duty, based on adjudication orders pending the appeals or pending applications for waiver/stay. As is evident from the circulars mentioned above, the Department of Revenue has specified different periods as relevant to initiate action for recovery. It is in this background that the present circular came to be issued on 1.1.2013 in a consolidated form rescinding the earlier circulars. In these cases, we are concerned only with appeals that are filed along with stay/waiver applications. All other cases where no appeal is filed or where no application for stay/waiver is filed, there is no cause for quarrel. The Officers are at liberty to proceed for recovery as per law. 12. The Ministry of Finance, Department of Revenue, being conscious of the ....
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....the provision under which the impugned circulars/instructions are issued by the Central Board of Excise and Customs and its effect on the assessee. Section 37-B of the Central Excise Act, 1944, which provides for issuance of circulars reads as under: Section 37-B. Instructions to Central Excise Officers. The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board : Provided that no such orders, instructions or directions shall be issued. (a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner of Central Excise (Appeals) in the exercise of his ....
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....Central Excise Rules, 2002, which provides for issuing supplementary instructions. Rule 31 of the Central Excise Rules, 2002 reads as under: "Rule 31. Power to issue supplementary instructions. - (1) The Board or the Chief Commissioner or the Commissioner, may issue written instructions providing for any incidental or supplemental matters, consistent with the provisions of the Act and these rules." 16. It is, therefore, clear that in exercise of such general power of superintendence and in order to ensure the effective functioning of the Departments of Excise and Customs, such circulars have been issued from time to time guiding the officers as to how they should proceed in matters relating to recovery of tax, duties and other amounts that are payable by the assessees or the importers, as the case may be, who have suffered adverse orders of adjudication before original authority or appellate authority. The present circular can therefore be at best termed as instructions by the Board. At best it is persuasive in character. Consequently, it is directory in nature and not mandatory. 17. Since the present issue which has been narrowed down relates to recovery proceedings pending app....
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....d, amend any order passed by it under sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central Excise or the other party to the appeal: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the other party, shall not be made under this sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard. (2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed: Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. (3) The Appellate Tribunal shall send a copy of every order p....
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....alty levied. However, the proviso to Section 35-F of the Central Excise Act empowers the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, to consider whether such deposit of duty or penalty would cause undue hardship to the assessee and dispense with such deposit subject to such conditions that the Appellate Authority may deem fit to impose so as to safeguard the interest of the Revenue. The proviso to Section 35-F of the Central Excise Act and proviso to Section 129-E of the Customs Act, 1962 apparently is balanced in its approach. While considering the undue hardship of the person who files the appeal before the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, it may impose such conditions while dispensing with the pre-deposit pending appeal after taking into consideration the interest of the Revenue. The Central Excise Act as well as the Customs Act provide for a check and balance between the claim of the assessee and the interest of the Revenue. This should not be lost sight of while considering the present issue and the scope of the circular/instruction. 20. If the circular attempts to defeat the object of Section 35-F of the Central ....
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....s), Commissioner before the Tribunal, if for some reason the appellate authority or the Tribunal does not hear the stay/waiver petitions at an early date, even though there is no fault on the part of the assessee, still then the department will initiate recovery proceedings within 30 days after filing of the appeal, if no stay/waiver is granted. This plea if it is based on a bona fide claim pending appeal, justifies the petitioners plea that the circular is issued in terrorem. 23. The petitioners are aggrieved by a portion of the instruction in Serial Nos.3, 6, 9 and 10. The words "if no stay is granted" and "whichever is earlier" used in the said clauses give the department a right to proceed and take coercive steps after the time limit of 30 days. If the stay/waiver application is not taken up for disposal by the Appellate Authority for one reason or the other, still then the authority will proceed for recovery quoting the above circular/instruction. This apparently appears to be arbitrary as is evident from the situation that prevails before the appellate forum. 24. The learned counsel for many of the writ petitioners brought to the notice of this Court the peculiar circumstan....
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....tute the coram for a bench in the case of Tribunal. 25. Insofar as Commissioner (Appeals) is concerned, it is clearly stated that large number of stay petitions are pending disposal. In spite of assessees request for early hearing of the stay/waiver applications the same has not been considered or decided. The inability on the part of the assessees to obtain interim orders is not on account of any delay or inaction on their part, but only due to the administrative difficulties expressed by the Office of the Commissioner (Appeals) and also due to the non functioning of the Tribunal with its full complement of members for a substantial period of time. 26. Placing before this Court the peculiar situation as above, the learned counsel for the petitioners plead that in the absence of early disposal of the stay/waiver applications by the Commissioner (Appeals) even as per the mandate of the provisions of the Customs Act and the Central Excise Act and also due to the non availability of members of the Tribunal which is causing a huge backlog, the petitioners/assessees should not be made to suffer by way of recovery proceedings based on the impugned circular/ instruction. 27. As was sta....
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....ve because the latter circular continuing certain benefits to the assessees was overlooked and the withdrawn circular was looked upon as in conflict with law. Such circulars, however, are not meant for contradicting or nullifying any provision of the statute. They are meant for ensuring proper administration of the statute, they are designed to mitigate the rigours of the application of a particular provision of the statute in certain situations by applying a beneficial interpretation to the provision in question so as to benefit the assessee and make the application of the fiscal provision, in the present case, in consonance with the concept of income and in particular, notional income as also the treatment of such notional income under accounting practice." (emphasis supplied) The above said case pertains to a circular issued under the provisions of the Income Tax Act which is analogous to Section 37-B of the Central Excise Act, 1944 and Section 151-A of the Customs Act, 1962. 30. On going through these provisions, it is clear that the present circular/instruction, which though not relatable to Section 37-B of the Central Excise Act, 1944 or Section 151-A of the Customs Act, 1....
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....the stay/waiver application is not taken up by the appellate forum, can the assessee/appellant be found fault with. The Supreme Court decision in Collector of Customs, Bombay v. Krishna Sales (P) Ltd., supra, relied upon did not give a mandate for fixing a time limit for recovery. All that it stated is that mere filing of appeal is no stay of proceedings. There is no dispute on this either side. 33. There can be no quarrel if the Commissioner (Appeals) decides the stay/waiver applications as per the proviso to Section 35-F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962 preferably by the time limit; or if the Tribunal decides the stay/waiver application within the time limit specified in the circular. But in the absence of proper functioning of the Tribunal due to non availability of members and when the Commissioner (Appeals) does not provide dates for hearing of the stay/waiver application within the time specified, it is not clear as to how the petitioners/ assessees can be found fault with. The Department cannot, under this circular, take away the substantial right granted under the statue to the petitioners/assessees. The difficulty expressed by the ....
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....id strides and in our view, it is time that the Union Ministry of Finance takes steps to ensure that proceedings before the adjudicating authorities as well as the Appellate Authorities including the Commissioner (Appeals) and the CESTAT are recorded in the electronic form. Once an appeal is filed before the Commissioner (Appeals), the filing of the appeal must be recorded through an entry made in the electronic form. Every appellant, including the assessee must indicate, when an appeal is filed, an email ID for service of summons and intimation of dates of hearing. The Commissioner (Appeals) must schedule the hearing of stay applications and provide dates for the hearing of those applications which must be published in the electronic form on the website. The order sheets or roznamas of every case must be duly uploaded on the website to enable both the officers of the Revenue and assessees to have access to the orders that have been passed and to the scheduled dates of hearing. We would also commend to the Union Ministry of Finance the urgent need to introduce electronic software that would ensure that the orders and proceedings of the CESTAT are duly compiled, collated and publish....
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....how before the recovery authority that they have filed an application for stay/waiver, it should be diligently followed and if it is found that the assessee is protracting the issue for some reason or the other, then recovery proceedings can be initiated showing proper reasons. The time limit specified in the circular/instruction insofar as it relates to appeals filed along with stay/waiver application is concerned should be interpreted in such a manner that it should not cause hardship to the genuine assessee, who has proceeded to file appeal along with stay/waiver application. If no order is passed in the stay/waiver application by the Commissioner (Appeals) or the Tribunal for some reason not attributable to the assessee, the authorities shall refrain from initiating coercive action. The circular/instruction stands clarified as above. The assessee is also required to show to the authorities that he is diligent in prosecuting the appeal along with the stay/waiver application. 37. The circular/instruction is accordingly clarified to state that while there is a power to initiate recovery proceedings on an erring assessee, the department should refrain from taking coercive steps if....