TaxTMI 
TaxTMI 
2013 (4) TMI 250
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....challenging the recovery notices issued pending 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.20....
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.... in Original issued by the Commissioner. Recovery initiated on filing of such an appeal, without waiting for the statutory 90 days period to be exhausted. 6 CESTAT Appeal filed with 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 gr....
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....s some Collectors have raised doubts as to whether Board's Instructions F. No. 208/3/86-CX.6, dated 26-8-1986 needed any revision. 2. The matter has been examined by the Board in consultation with the Law Ministry. The Law Ministry have, inter alia, opined 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. I....
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....ry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Central Excise - Whether coercive measures to recover 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) be taken - Regarding. 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 as....
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.... may be informed accordingly." (f) Circular No. 396/29/98-CX, dated 2.6.1998 "Circular No. 396/29/98-CX, dated 2.6.1998 [From F.No.201/04/98-CX.6] Government of India Ministry of Finance, Department of Revenue Central Board of Excise & Customs, New Delhi Subject: Central Excise - Whether coercive measures to recover duty demanded as a result 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, reco....
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....peal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. . In view of the above stated legal position, the field officers should refrain from taking coercive action till the period of six months of filing a stay petition before the CESTAT, or till the disposal of the stay petition, whichever is earlier. The 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 for....
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....ar No.396/29/98-CX, dated 2.6.1998. It is, therefore, clear that the Board was of the view that, as a general principle, recovery should be resorted to in cases where no appeal is filed or where there is a failure on the part of the assessee to obtain interim orders. If appeal and stay/waiver applications are filed, a reasonable time should be given. 13. In the light of the above, this Court has to now consider 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 ....
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....very of duty/tax due. The provision of Section 37-B and Section 151-A of the Central Excise Act, 1944 and the Customs Act, 1962 respectively, which are referred to above, does not deal with such contingency (i.e) issues relating to recovery of duty/penalty due on orders of adjudication. 15. If the above said provisions do not stricto sensu apply to the circulars/instructions under challenge, we may have to fall back upon Rule 31 of the 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 a....
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....ficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal. (2) The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, 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 w....
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....the Customs Act, the analogous provisions are Section 128 (Appeals to the Commissioner (Appeals)) and Section 129-A (Appeals to the Appellate Tribunal); and Section 129-E provides for waiver of pre-deposit of duty, penalty and interest. 19. In no uncertain terms, Section 35-F of the Central Excise Act and Section 129-E of the Customs Act mandates that a person desirous of appealing against any decision or order pending the appeal shall deposit with the adjudicating authority the duty demanded or penalty 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, ....
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....as allowed and direction was issued to take steps thereafter. Insofar as the present circular is concerned, the area of controversy appears to be very narrow. None of the petitioners are pleading for any indulgence insofar as S.Nos.1, 2, 4, 5, 7 and 8 are concerned and insofar as S.No.11 is concerned, it is stated that it is subject to orders of Court. The grievance appears to be that even if stay/waiver applications are filed before the Commissioner (Appeals) or against the order of the Commissioner (Appeals), 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 ....
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....Chennai have resolved to request your goodselves to kindly take immediate steps to fill up the vacancies in the posts of Member (Judicial) and Member (Technical) as early as possible. i. Till such time, ensure that the bench functions at least for two weeks in a month, by regularly deputing Members from other benches." The said letter clearly reveals the apathy of the petitioners and similarly placed assessees. It is evident that the non consideration of the stay/waiver applications is because of lack of members to constitute 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.....
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....ing & Wire Industries, 2008 (231) ELT 22 (SC), a Constitution Bench of the Supreme Court held that the circulars issued by the Board are not binding on the assessee and cannot override the decision of the Court. 29. The Supreme Court in UCO Bank v. Commissioner of Income Tax, West Bengal, 1999 (111) ELT 673 (SC) has held that circulars are meant to ensure proper administration of the statute, in the following words: "15. The said circulars under Section 119 of the Income Tax Act were not placed before the Court in the correct perspective 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....
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....g over this issue as to what should be the correct time limit for initiating recovery proceedings, as the statute is silent on the issue. Different yardsticks have been used from time to time, but one common factor appears to be that the Board was conscious of the fact that after filing of the appeal, if stay/waiver applications are filed, reasonable period of time should be granted. In some cases, time limit has been fixed and in some cases it has not been specified. In the present case, the Board has clearly fixed the time limit. The question is if 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 t....
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....enue submitted during the course of the hearing that the field officers of the Revenue who initiate recovery action are independent of the adjudicating or appellate forum and hence have no means of verifying the status of the applications for stay and it is hence for the assessee, when recovery action is initiated to inform the jurisdictional Commissioner of the pendency of the stay application. We do not find that this can be treated as a valid justification for penalizing an assessee whose conduct is otherwise free from blame. Modern technology has made rapid 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 a....
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.... more in the nature of a guidance to the department authorities insofar as the recovery is concerned, is of the firm opinion that the said circular/instruction should not be taken as a mandate to initiate recovery proceedings automatically after expiry of the period specified. If an appeal has been properly filed along with stay/waiver application and intimation of the same is given to the department, then the initiation of recovery proceedings should wait for a reasonable period depending on the date given by the appellate authority. If the assessee is able to show 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 appl....