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2002 DIGILAW 164 (ALL)

TITAWI SUGAR COMPLEX v. COMMR. OF CUS. AND C. EX.

2002-01-25

SUDHIR NARAIN, V.M.SAHAI

body2002
( 1 ) THE petitioner has sought writ of mandamus commanding the Commissioner, Customs and central Excise (Appeals), Mangal Pandey Nagar, Meerut, respondent No. 1, to decide the application for stay of the recovery of the dues and a further writ, order or direction in the nature of certiorari quashing the detention memo dated 29th November, 2001 and a direction restraining the respondents from realising the amount of Rs. 14,25,092 from it. ( 2 ) BRIEFLY, stated the facts, as stated in the petition, are that the petitioner is engaged in the manufacture and sale of sugar and molasses at its factory situated in village and post Titawi, district Muzaffarnagar. It, during the period October, 1995 to June, 1997, received number of consignments as inputs and the entry was accordingly made in R. G. 23a, Part I Register but did not make its corresponding entry for availing Modvat Credit in R. G. 23a, Part II on the advice of the Excise Officer. The petitioner was given a show cause notice, dated 21st April, 1998. It submitted a detailed reply before the Deputy Commissioner, Central Excise Division, muzaffarnagar, who vide order dated 11th June, 1999 disallowed the Modvat Credit of Rs. 4,32,503 and imposed a penalty of Rs. 1,00,000. ( 3 ) FEELING aggrieved by the aforesaid order, the petitioner filed appeal before the Commissioner of Central Excise (Appeals), Ghaziabad along with an application under Section 35f of the central Excise Act, 1944 (in short the Act) for dispensing with the condition of pre-deposit of the duty as well as penalty amount for entertaining the appeal and stay of the recovery of the same. The application is still pending. ( 4 ) ON 29th November, 2001 the petitioner received a detention memo issued by the Deputy commissioner, Central Excise Division, Muzaffarnagar, respondent No. 3, by which 424 bags of sugarcane of M-31 Grade, Season 2000-2001 has been detained while the petitioners application to dispense with the condition of pre-deposit filed under Section 35f of the Act is pending. Section 35f reads as under : "section 35f. Section 35f reads as under : "section 35f. Deposit, pending appeal, of duty demanded or penalty levied.- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise Authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied : provided that where in any particular case, the Commissioner (Appeals) or the Appellate tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. " ( 5 ) THE contention of learned Senior Counsel for the petitioner, is that the recovery proceedings against the appellant should remain stayed till the application for dispensing with the condition of pre-deposit and stay application are disposed of by the Commissioner (Appeals) in view of the circular dated 2nd June, 1998 issued by the Board. ( 6 ) THE Ministry of Finance (Department of Revenue) Central Board of Excise and Customs, New delhi issued Circular No. 396/29/98-CX, dated 2nd June, 1998 giving certain guidelines in respect of recovery of the dues during the pendency of the stay application. Paragraph 3 of the said Circular refers to the view of the Board that no coercive measure should be taken to realise the dues till the application is disposed of by the Commissioner (Appeals ). The Circular reads as under : "circular No. 396/29/98-CX, dated 2nd June, 1998 [from F. No. 201/04/98-CX. 6] government of India ministry of Finance (Department of Revenue), central Board of Excise and Customs, New Delhi subject: Central Excise - Whether coercive measures to recover duty demanded as 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. 1. On the question of recovery of dues during pendency of stay application before the commissioner (Appeals), the matter was examined by the Board and necessary instructions were issued vide Circular No. 23/90/cx. 1. On the question of recovery of dues during pendency of stay application before the commissioner (Appeals), the matter was examined by the Board and necessary instructions were issued vide Circular No. 23/90/cx. 6, dated 12th December, 1990 issued from F. No. 209/107/89-CX. 6 and Circualr No. 16/92-CX. 6, dated 12th November, 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 (Appeals) 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 (Appeals) was not in a position to dispose of the main appeal within the same time frame. 2. Recently, the Mumbai High Court has ordered, that Commissioner (Appeals) may be directed to dispose of stay application within the specified time-limit and during the pendency of stay application no coercive action should be taken to realise the arrears of revenue. 3. Keeping the aforesaid in view, the Board has decided that no coercive action should be taken to realise the dues till the disposal of the stay application by the Commissioner (Appeals) and the commissioner (Appeals) must dispose of the stay application within one month of its filing. " ( 7 ) THE limitation for filing the appeal under Section 35 of the Act is three months from the date of the communication of the order. There is no provision that the proceedings for recovery of the amount of duty or penalty shall not be taken till the expiry of the period of limitation for filing the appeal. The Board, however, issued above Circular that for three months it would be reasonable not to take any coercive measures to recover the dues unless the application for stay is rejected by the Appellate Authority in the meantime. ( 8 ) THE second part of the Circular provides that when an application is filed to dispense with the requirement of pre-deposit on filing appeal or an application for stay is pending, the recovery of dues should remain stayed as against the appellant. ( 8 ) THE second part of the Circular provides that when an application is filed to dispense with the requirement of pre-deposit on filing appeal or an application for stay is pending, the recovery of dues should remain stayed as against the appellant. ( 9 ) THE appeal itself is not entertainable till the amount is paid or the Commissioner (Appeals)dispenses with the condition of pre-deposit under the proviso to Section 35f of the Act. ( 10 ) ONE view is that the appellant should not be penalised when the application for dispensing with the requirement of pre-deposit or application for stay of recovery is pending but it has not been decided by the Commissioner (Appeals ). The other view is that the mere filing the appeal does not amount as stay of the recovery of the dues till an application is decided. In this situation it is fundamental duty of the Commissioner (Appeals) to decide the application within the time frame and in view of the circular if the recovery proceeding for realisation of dues against the appellant remains pending, would breed malpractice. The legislative intent is clear that the duty and penalty, if imposed, be paid at the time of filing of appeal. The appellant gets the benefit of pendency of appeal even though there is no interim stay order passed on the application filed by the appellant. In Vespa Car Co. Ltd. v. Assistant Collector of Central Excise, 1992 (61) E. L. T. 16 (All.), the Court, relying upon the Circular of the Central Board of Indirect Taxes, dated 2nd march, 1990, observed that it would not be fair and just to proceed with the recovery, while applications for stay of the impugned order or for waiver of the conditions of pre-deposit are pending before the Appellate Authority. ( 11 ) WE are not expressing any opinion as to whether any circular can be issued which would be in contravention of provision of the Act. Section 35f of the Act does not provide that the recovery of dues shall remain stayed till the application filed by the appellant under that provision is pending. The Board issued the circular on equitable consideration that when the application is pending, coercive method should not be resorted to for recovery of the dues. Section 35f of the Act does not provide that the recovery of dues shall remain stayed till the application filed by the appellant under that provision is pending. The Board issued the circular on equitable consideration that when the application is pending, coercive method should not be resorted to for recovery of the dues. In d. C. W. Limited v. Commissioner (Appeals), 1998 (97) E. L. T. 424 (Guj.), the Court noted malpractice and made the following observations: "it is not necessary and it is not in public interest to provide that coercive recovery should not be enforced until the stay application or application under Section 35f is decided by the commissioner (Appeals ). Three months time from the date of the serving of the order-in-original should be considered enough for any party to approach the Appellate Authority for appropriate interim relief. Now fortified by this Courts orders, the Commissioner (Appeals)and the parties can expect the stay application to be decided within one month. Therefore, the protection against coercive recovery is not necessary to be extended beyond three months as otherwise it would only encourage parties to sit pretty until the last week of three months period and then await the Commissioner (Appeals) orders of stay and till then not to pay excise dues. " ( 12 ) THE Apex Court, in Union of India v. Jesus Sales Corporation, 1996 (83) E. L. T. 486 (S. C.), laid down guidelines for disposal of stay applications while considering the similar provision under Imports and Export (Control) Act, 1947, The Supreme Court did not uphold the decision of Delhi High Court wherein it was held that the appellant should necessarily be heard on an application to dispense with the requirement of pre-deposit of the amount under the impugned order. ( 13 ) IN this context it is fundamental duty of the Commissioner (Appeals) to decide the applications within a reasonable time. What would be the reasonable time is given in the Circular dated 2nd June, 1998 referred to above. In Paragraph 3 it is specifically mentioned "the commissioner (Appeals) must dispose of stay application within one month of its filing. " ( 14 ) IN D. C. W. Ltd, case (supra), the Court expressed the opinion that the application should be decided within one month from the date of filing of the appeal. In Paragraph 3 it is specifically mentioned "the commissioner (Appeals) must dispose of stay application within one month of its filing. " ( 14 ) IN D. C. W. Ltd, case (supra), the Court expressed the opinion that the application should be decided within one month from the date of filing of the appeal. The Supreme Court has laid great emphasis on the duty of the Courts to decide the matter pending before it expeditiously. In Anil rai v. State of Bihar, 2001 AIR SCW 2833, where the judgment was reserved by the High Court but was not delivered within reasonable time, the Court laid down certain guidelines. In P. H. Pandian v. P. Veldurai and Anr. , JT 2001 (9) SC 10, where trial was conclouded but the judgment was reserved for 22 months, deprecated the practice as improper. ( 15 ) IN the above context and the circumstances, some of the guidelines regarding the disposal of stay application may be followed : 1. The Registry of the Appellate Authority shall fix the date of hearing/deciding the application within 15 days of its filing before the Appellate Authority. The Appellate Authority shall decide the application on the same date and in any case within 15 days of such date fixed. 2. The Commissioner (Appeals) shall prepare a list every month as to how many applications remained pending before it and for what reason. It shall submit report to the Central Board of excise and Customs, New Delhi regarding the applications pending before it. 3. The Board will consider the explanation, if any, submitted by the Commissioner (Appeals) in this respect. 4. If the proceedings for recovery of the dues are taken during the pendency of stay application. The appellant can file application before the Appellate Authority inviting its attention to the pending application for stay and on such application the Authority must pass order within ten days. ( 16 ) COMING to the facts of the present case, the petitioner is alleged to have filed the appeal on 14th September, 1999 along with an application under Section 35f for dispensing with the condition of pre-deposit of duty as well as penalty. The said application is pending for the last more than one and a half year and still stands undisposed of. The said application is pending for the last more than one and a half year and still stands undisposed of. On the other hand on 29th november, 2001 detention memo has been issued by respondent No. 3 by which 424 bags of sugar was detained. ( 17 ) IN the facts and circumstances, the petitioner is directed to file application before respondent no. 2 for consideration of its application filed under Section 35f of the Act. On such application respondent No. 2 will pass order within ten days. ( 18 ) THE writ petition is disposed of with the directions given above. .