Customs, Excise and Gold Tribunal - Bangalore
Madura Coats Pvt. Ltd. vs Cce on 3 June, 2005
ORDER T.K. Jayaraman, Member (T)
1. This is an appeal filed against OIA No 204/04 dated 17.12.04 passed by the Commissioner of Central Excise (Appeals) Madurai.
2. The brief facts are as follows:-
The Dy Commissioner of Central Excise Madurai in his order dated 16.8.04 sanctioned rebate amount of Rs 1,03,82,537/- in favour of the appellant. However he appropriated the said amount against another demand to the tune of Rs 2,11,37,332/- confirmed in the OIA No 175/03 dt 9.5.03. The appellants are aggrieved over the appropriation. The party went in appeal to the Commissioner (Appeals) who has confirmed the Dy Commissioner's Order.
3. Shri K.S. Ravi Shankar learned advocate appeared on behalf of the appellants and Shri Ramakrishnappa learned DR for the revenue.
The learned advocate urged the following points.
i) The appellants have appealed against OIA No. 175/03, dated 9.5.03. Moreover, the Hon'ble Tribunal Chennai has waived the recovery of pre-deposit vide stay order No 75/04 dt 23.1.04. The lower authorities order dated 16.8.04 has been passed in utter disregard of the order passed by CESTAT Chennai.
ii) The appropriation made by lower authority is contrary to settled law by Hon'ble High Court's/Hon'ble Tribunals as well as Board's instructions that no coercive action could be taken by the Department for recovery of dues during the pendency of stay application before the appellate authorities.
iii) The lower authority appropriated the amount without issuing any show cause notice in gross violation of the principles of natural justice. The Commissioner (Appeals) gravely erred in holding that the Order of appropriation by the lower authority cannot be violated because
a) Appellant had filed application for extension of stay only after appropriation of refund was carried out by the competent authority.
b) Appellant had not furnished any proof for having received their application for extension of stay filed on 20.7.04 by CESTAT Chennai and hence no stay application was pending on the date (16.8.04) of Order of appropriation.
c) Commissioner's findings are contrary to facts on record as the appellants had categorically stated in their grounds of appeal that the appellant had filed an application for extension of stay on 20.7.04 before the CESTAT Chennai and the same was posted for hearing on 17.8.04
iv) In the following case, it has been held that during the pendency of stay application, no coercive action could be taken by the Department for recovery of dues and the sanctioned refund payable to the appellants cannot be appropriate against such sums due to Govt in terms of Section 11 of the Central Excise Act 1944.
1) National Steel Industries Ltd. v. UOI (2001 (134) ELT 616 (MP)
2) CCE Jaipur v. Instrumentation Ltd. (2002 (140) ELT 518 (T)
3) Karan Packaging Pvt. Ltd. v. CCE Bhopal (2000 (120) ELT 399 (T)
4) CCE Jaipur-I v. Indian Shaving Products Ltd., (2002 (144) ELT 650 (T)
v) The recovery proceedings are against Board Circular No 396/29/98 CE dated 2.6.98.
vi) Even as per the Board Circular dated 22.9.03, in case the department is aggrieved, they should move an application to vacate interim stay by filing miscellaneous application. This circular has been given a go by.
vii) The learned DR informed the fact that the lower authority has acted as per the provisions of law in appropriating the rebate amount towards recovery of confirmed demand.
4. We have gone through the rival contentions. The Original Authority has appropriated the rebate amount due to the appellant in spite of the stay given by CESTAT, in respect of Order-in-Appeal 175/03 dated 9.5.03, by taking a view that the stay stands vacated on 27.7.04 by virtue of provisions contained in Section 35 C (2A) of the Central Excise Act 1944. The above view of the Dy Commissioner can not be accepted in view of the interpretation of the provisions of Section 35 C 2(A) in the case of Polyfill Sacks v. UOI (2005 (183) ELT 344). In the above mentioned case, it has been held as follows:-
"Appeal to Appellate Tribunal - Stay Order-Disposal of appeal within 180 days of passing of stay order by the Appellate Tribunal - HELD: though, the language employed by the Statute appears to be mandatory in terms, considering the object behind the provision it has to be understood to mean as being directory in nature - From insertion of Section 35 C(2A) of Central Excise Act 1944 on statute book, it cannot infer a legislative intent to curtail/withdraw powers of the Tribunal to grant stay in appropriate cases - It is also not possible to infer any curtailment of such powers beyond the period of six months - Legislature would have specifically provided so if it was so intended - Revenue's contention that the assessee must approach the Tribunal and seek extension of stay already granted is misconceived in absence of any change in circumstances - Interpretation that provisions of Section 35 C(2A) ibid are mandatory permitting authorities to initiate action once period of 180 days expire from the date of the order granting stay is against the plain language of the provision and does not flow from the provision"
5. In view of the above position, the action of the Original Authority is incorrect. In other words, stay granted by the Tribunal would continue even beyond 180 days unless the same is vacated. Therefore, the Order-in-Appeal has no merits. We allow the appeal with consequential relief.