Customs, Excise and Gold Tribunal - Delhi
Ipcl vs Commissioner Of Central Excise on 9 June, 2004
Equivalent citations: 2004(95)ECC425, 2004(169)ELT267(TRI-DEL)
JUDGMENT
K.K. Usha, J. (President)
1. The miscellaneous application No. E/M/983/2003-Mum. in Appeal No. E/3180/2001-Mum. was filed by the appellant for extension of the order of stay. When the above application came up for consideration before a Bench of two Members at West Zonal Bench, Mumbai it was brought to their notice that there are conflicting decisions on the issue of jurisdiction of this Tribunal granting stay beyond the period of 180 days after incorporation of Sub-section (2A) in Section 35C of the Central Excise Act w.e.f. 11-5-2002. The Bench noted that in Kumar Cotton Mills Pvt. Ltd. v. CCE, Ahmedabad, 2002 (146) E.L.T. 438, a two Member Bench of the West Zonal Bench, took the view that even though the period of the order of stay initially passed, would come to an end on expiry of 180 days in view of the amended provisions, jurisdiction of the Tribunal to extend period of stay by passing fresh orders is not affected. The Bench also noted a Larger Bench of this Tribunal had exercised such power and extended the stay beyond the period of 180 days in Himalaya International Ltd. v. CCE, 2003 (56) RLT 610. Even though the referring Bench agreed with the view taken in Kumar Cotton Mills Pvt. Ltd., it referred the matter for consideration by the Larger Bench as it was noticed that a different view has been taken by another Bench of West Zonal Bench in Themis Pharmaceutical v. CCE, Mumbai, 2003 (157) E.L.T. 569. We, have therefore to consider the conflicting views expressed by two Benches of Co-ordinate jurisdiction.
2. Section 35B of the Central Excise Act, 1944 provides for an appeal before the Tribunal. Section 35F mandates pre-deposit of the duty or penalty levied against which appeal is filed. The proviso to Section 35F provides that the Tribunal may dispense with such deposit if it is of the opinion that deposit of duty demand and penalty would cause undue hardship to the appellant. Sub-section (1) of Section 35C provides that the Appellate Tribunal may after giving the parties to the appeal an opportunity of being heard pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. Following is the provision that is added to Section 35C as Sub-section (2A) w.e.f. 11-5-2002-
"(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 eight 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. In Kumar Cotton Mills Pvt. Ltd. the Bench took the view that the power to grant stay is part of inherent power of the Tribunal as an appellate authority since there is no specific provision under the Statute enabling the Tribunal to pass an order of stay. In coming to the above conclusion the Bench placed reliance on decision of the Delhi High Court in ITC Ltd. v. UOI, 1983 (12) E.L.T. 1 (Del.) followed by decision of this Tribunal in CCE v. Kama Industries Ltd., 1991 (53) E.L.T. 566. Reliance was also placed on the decision of the Supreme Court in ITO v. M.K. Mohammed Kunhi, 1969 (71) ITR 815 and a decision of the Income Tax Tribunal in Centre for Women's Development Studies v. Deputy Director of Income Tax, 2002 (257) ITR 60. Bench also took the view that for inability of the Tribunal to hear the matter within 180 days a party should not be visited with adverse consequences. The ratio of the decision of the Supreme Court in Rajkumar Dey and Ors. v. Tarapada Dey and Ors., 1987 (4) SCC 398 was relied in support of the above view.
4. In Themis Pharmaceuticals reliance placed by the appellant on Kumar Cotton Mills Pvt. Ltd. was brushed aside by the Bench observing that it was 'a decision given in a vacuum' in the absence of a dispute and therefore not binding precedent for co-ordinate Benches. In coming to the above conclusion the reasoning is that the orders of stay which came up for consideration before the Bench in Kumar Cotton Mills Pvt. Ltd. were all passed before insertion of Sub-section (2A) of 35C and therefore, has no relevance for considering the effect of Sub-section 2A. Reliance placed by the parties on Himalaya International was rejected on the ground that it is not a reasoned order. Relying on a decision of the Orissa High Court in CCE & C v. Golden Hind Shipping (India) Pvt. Ltd., 1993 (68) E.L.T. 739 (Ori.) the Bench declined to accept the contention raised by the assessee on the basis of the ratio of the decision in ITO Ltd. v. M.K. Mohammed Kunhi. But it is relevant to note that even though Kumar Cotton Mills had relied on a direct decision of the Delhi High Court in ITC v. UOI regarding the inherent power of this Tribunal to grant stay while exercising jurisdiction under Section 35C, no reference is seen to the above decision in Themis Pharmaceuticals.
5. With great respect to the learned Members of the Bench we are constrained to observe that reliance placed on the decision of the Supreme Court in S.R. Chaudhari v. State of Punjab, 2001 (7) SCC 126 is totally out of context. The issue involved there was one relating to the scope of Article 164 and in particular Article 164(4) of the Constitution. Clause (4) provides that a Minister who for any period of six consecutive months is not a member of the legislature of the State shall at the expiration of that period cease to be a Minister. The issue that came up for consideration was whether a non-member, who fails to get elected during the period of six consecutive months, after he is appointed as a Minister or while a Minister has ceased to be a legislator, be re-appointed as a Minister without being elected to the legislature after the expiry of the period of six consecutive months. The Apex Court after referring to the debate of the Legislative Assembly indicating that non-Members' inclusion in the Cabinet was considered to be a privilege that extends only for six months during which period the Member must get elected otherwise he would cease to be a Minister took the view that the privilege of continuing as a Minister for six months without being an elected member is only one-time slot for the individual concerned during the term of the Legislative Assembly concerned. Article 164(4) is not a source of power or an enabling provision for appointment of a non-legislator as a Minister even for a short duration. It is actually in the nature of a disqualification or restriction for a non-member who has been appointed as a Minister to continue in office without getting himself elected within a period of six consecutive months. Reappointing that individual without his getting elected would, therefore, be undemocratic and derogatory to the Constitutional scheme, an abuse of Constitutional provisions and the Constitutional scheme. The intention of the framers of the Constitution to restrict such appointment for a short period of six consecutive months, cannot be permitted to be frustrated through manipulation of reappointment. We fail to comprehend how the ratio of the above decision rendered in the context of Constitutional provisions would apply to the facts of the present case.
6. The observation of the Bench that if the Tribunal grants further extension of stay beyond the period of 180 days the amendment would become redundant is also not justified. A similar contention raised in regard to Sub-section (2A) of Section 254 of the Income Tax Act was not accepted by the Income Tax Appellate Tribunal in Centre for Women's Development Studies. The inherent jurisdiction of the Tribunal to grant interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by Sub-section (2A). At the end of the period of 180 days when the appellant makes an application for extension of the stay the Tribunal can always consider whether there is any change in the circumstances which would justify extension or modification of the stay. The Revenue gets an opportunity to bring to the notice of the Tribunal such changed circumstances e.g. a binding decision on the issue in its favour.
7. One of the decisions relied on in Kumar Cotton Mills is the decision of Delhi High Court in ITC v. UOI. In this case the issue of jurisdiction of this Tribunal to grant an order of stay was specifically considered. The High Court took the view that apart from the proviso to Section 35F as an appellate authority the Tribunal has inherent power to grant relief in exercise of its appellate jurisdiction. Relevant portion of the judgment is quoted below :-
"Apart from the proviso to Section 35F, the appellate authority has inherent power of granting interim relief in the exercise of its appellate jurisdiction. This has been so recognized explained by the Supreme Court in the case of Income Tax Officer v. Mohd. Kunhi, 92 ITR 341. We must make it clear that it does not mean that in every case where appeal is filed the Collector (Appeals) or the Tribunal must, as a matter of course, grant interim relief. The guidelines for the grant of interim relief are contained in the proviso to Section 35F, namely, relief will be granted only if there would be undue hardship to the person if he is asked to pay excise duty or penalty. Unless, therefore, it can be shown by the appellant that undue hardship would be caused if he is required to pay the duty or penalty the appellate authorities would be entitled to refrain from granting any interim relief. What is undue hardship would depend upon the facts of each case."
In ITO v. M.K. Mohammed Kunhi the Hon'ble Supreme Court observed as follows :-
"The argument advanced on behalf of the appellant before us that, in the absence of any express provisions in Sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal, it must be held that no such power can be exercised by the Tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income-tax Officer who can give the necessary relief to an assessee. The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal. Indeed, the Tribunal has been given very wide powers under Section 254(1), for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal can be defeated if ultimately orders of the departmental authorities are set aside......... It is a firmly established rule that an express grant of statutory power carries with it by necessary implications the authority to use all reasonable means to make such grant effective (Suthernland's Statutory Construction, third edition, Articles 5402 and 5402). The powers which have been conferred by Section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective."
8. In Themis Pharmaceuticals the Bench took the view that the ratio of the decision in ITO v. M.K. Mohammed Kunhi will not be applicable while considering the issue of jurisdiction of this Tribunal in granting stay. In coming to the above conclusion reliance was placed on a decision of the Orissa High Court in CCE & C v. Golden Hind Shipping (India) Pvt. Ltd., 1993 (68) E.L.T. 739 (Ori). We will now examine the decision of the Orissa High Court. In the above case the issue that came up for consideration was whether CEGAT had the power to direct the petitioner to pay a sum of Rs. 5 lakhs as compensation to the Opposite party No. 1 in exercise of its powers under Section 129B(1) of the Customs Act, 1962 and pass another order enhancing the compensation to Rs. 20 lakhs through amendment of the said order in exercise of its power under Section 129B(2) of the Customs Act. It is in this context the Hon'ble High Court compared the powers of CEGAT under Section 129B of the Customs Act and powers of ITAT under Section 254(1) of the Income Tax Act. Their Lordship were not considering the power of the Appellate Tribunal to grant stay as an inherent power of an appellate authority when there is no statutory provision for granting stay. It is to be noted that this specific issue was considered by the Delhi High Court in ITC Ltd. v. UOI and the Hon'ble High Court placed reliance on ITO v. M.K. Mohammed Kunhi. We are, therefore of the view that Kumar Cotton Mills was correct in following the decision of Delhi High Court.
9. A Bench of Madras High Court had also occasion to consider the jurisdiction of this Tribunal to grant interim relief in CC v. Madras Electro Castings P. Ltd., 1994 (71) E.L.T. 646. The Court took the view that the Tribunal has jurisdiction to pass such interim order as are necessary in order to aid the main relief sought for in the appeal. Relevant portion of the judgment is quoted below :-
"8. In addition to this, it may also be as to whether the Customs, Excise and Gold (Control) Appellate Tribunal has jurisdiction to issue interim orders. It may be pointed out here that Section 129B of the Act empowers the Customs, Excise and Gold (Control) Appellate Tribunal to confirm, modify or annul the decision or order appealed against. It is also open to it to remit the matter back for fresh adjudication. In addition to this, Rule 41 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 specifically provides that the Tribunal may take such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. The words 'secure the ends of justice' are wide enough to clothe the Tribunal with powers to pass such interim orders, as it may deem fit in the facts and circumstances of the case. In addition to this, the power of Appellate Tribunal to confirm, modify or annul the decision or order appealed against also takes in its fold to pass such interim orders as are necessary in order to aid the main relief sought for in the appeal. To put it in other words, the interim relief is granted to preserve in status quo the rights of the parties (See Kihoto Hollohan). In Madan Gopal's case, it has been pointed out that the interim orders are passed in aid of the main relief. Therefore, it is quite inherent in the Appellate power and more so in the case of the CEGAT to pass such interim orders as are necessary for the purpose of ensuring that the main relief sought in the appeal is available to the party at the end of the proceeding. The fact that Section 129E only provides for relieving the appellant from the undue hardship that would be caused to him in depositing the duty and interest as demanded or penalty as levied, does not in any way take away the inherent power of the Appellate Tribunal to pass such interim orders as are necessary. This is only re-stated in Rule 41 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982."
10. Income Tax Appellate Tribunal had occasion to consider an identical issue relating to the power of the Tribunal to grant further stay after the expiry of six months since passing the first order of stay, in Centre for Women's Development Studies v. Deputy Director of Income Tax. The relevant portion from the above order reads as follows :-
"On a careful perusal of the relevant new provisions in the law and aforesaid judicial pronouncements, we are of the considered opinion that Sub-section (2A) was inserted in Section 254 to curtail the delays and ensure the disposal of the pending appeals within a reasonable time frame. There is no intention of the Legislature to curtain or withdraw the powers of the Tribunal for granting a stay exceeding a period of six months. Had it been the intention of the Legislature, there would be a specific amendment in the Act to this effect because if the powers of the Tribunal for granting the stay exceeding a period of six months are withdrawn by this amendment, the object of imparting justice by the Tribunal cannot be achieved even in those cases where the assessee has co-operated with the Tribunal to its full extent and the hearing is in progress. We, therefore, are of the considered view that the Tribunal has power to grant a further stay on the expiry of six months of earlier stay if the facts and circumstances so demand."
While coming to the above conclusion the Tribunal had taken note of the Explanatory Notes on Clauses of the Finance Bill introducing the amendment.
11. In Themis Pharmaceuticals reference is made to Notes on Clauses of the Finance Bill, 2002 amending Section 35C. It only says that the amendment was to provide that in cases where stay order had been passed by the Tribunal, time limit for disposing of the appeal shall be 180 days and also to provide for automatic vacation of the stay order in the case of non-disposal of such appeals. As in the case of amendment to Section 254(1) of the Income Tax Act, 1961 Notes on clauses on amendment of Section 35C also do not refer to the jurisdiction of the Tribunal to pass orders extending the period beyond 180 days. Therefore, the Notes on Clauses are not of any help to support the view taken in Themis Pharmaceuticals.
12. We find that in Themis Pharmaceuticals the Bench has taken note of the fact that it is practically not possible to dispose of the appeals pending before the Bombay Bench of the Tribunal within 180 days. The Bench has also suggested some remedy for the problem. In this connection we may observe that similar situation can arise in other Benches also where an appeal posted within 180 days could not be taken up for different reasons. It may be due to non-availability of time for the Bench or due to non-availability of the Bench itself. Unless the Tribunal has the power to extend stay beyond 180 days, the assessee's interest will be in jeopardy for no fault of his. Even the order granting exemption from pre-deposit will be rendered nugatory as the assessee will be compelled to satisfy the demand during dependency of the appeal. It has been always the judicial view that no party should be prejudiced due to action or inaction on the part of the court (Rajkumar Dey and Ors. v. Tarapada Dey, 1987 (4) SCC 398).
13. On going through the decision rendered by a bench of two members in Kumar Cotton Mills Ltd. we find that the Bench taking into consideration the importance of this issue permitted Advocates and Consultants not representing the applicants also to make submissions to assist the Court. A decision rendered after such hearing on the effect of the introduction of Sub-section (2A) on the jurisdiction of the Tribunal as above should not have been just brushed aside as one rendered in 'vacuum'. Even if the Bench which heard Themis Pharmaceuticals took a different view, it should have referred the issue for consideration by Larger Bench as judicial decision would demand.
14. In the light of the above discussion, we are inclined to uphold the view taken in Kumar Cotton Mills and agree with the view expressed in the reference order on the jurisdiction of the Tribunal to pass interim order. We disagree with the view taken in Themis Pharmaceuticals. We, therefore, hold that the Tribunal has jurisdiction to grant stay even after the expiry of 180 days from the date of initial order of stay. After answering the issue raised for consideration by the Larger Bench, as above, we send back the Miscellaneous Application for hearing by the appropriate Bench.