Custom, Excise & Service Tax Tribunal
M/S. Sanghi Textiles Pvt. Ltd vs Cce(Appeals-Iii), Hyderabad on 17 October, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/21674/2014 (Arising out of Order-in-Appeal No.-III)CE dt. 11/03/2014 passed by CC,CE&ST(Appeals), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Sanghi Textiles Pvt. Ltd. ..Appellant(s) Vs. CCE(Appeals-III), Hyderabad ..Respondent(s)
Appearance Shri G. Sudhakar, Advocate for the appellant.
Shri P.S. Reddy, Asst. Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:17/10/2016 Date of decision:17/10/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The above appeal is filed against the order passed by Commissioner(Appeals) which upheld the order of rejection of refund of interest.
2. The appellants were sanctioned refund of Rs.2,50,07,459/- on the refund claim submitted to the Department. However no interest was granted on the refund amount. The appellants vide their letter dt. 11/10/2005 requested for sanction of interest under Section 11BB of Central Excise Act, 1944. After due process of law, the original authority sanctioned an amount of Rs.33,11,946/- as interest on refund claim of Rs.2,50,07,459/-. However the original authority appropriated the sum towards dues of Rs.29,34,402/- arising out of Order-in-Original No.1/2006 dt. 13/01/2006. Though the appellants preferred appeal before the Commissioner(Appeals) against the appropriation, the appeal was rejected. Hence the appellants are now before the Tribunal.
3. On behalf of the appellant, the learned counsel Shri G. Sudhakar submitted that the Department has wrongly adjusted/appropriated the sanctioned interest amount towards dues in regard to Order-in-Original No.1/2006 dt. 13/01/2006 as the said Order-in-Original has not attained finality. He submitted that the appellant had preferred an appeal before the Tribunal against the said Order-in-Original and the Tribunal vide Stay Order No.1335/2006 dt. 20/11/2006 had granted stay of recovery on predeposit of Rs.15 lakhs. The Tribunal having waived and stayed the recovery of amount arising out of Order-in-Original No.1/2006 dt. 13/01/2006, the Department ought not to have appropriated the sum of Rs.29,34,402/- from the sanctioned refund of Rs.33,11,946/-. He also relied upon the judgment passed by the Honble Apex Court in the case of Commissioner Vs. PML Industries Ltd. [2016(335) ELT A79 (SC)].
4. On behalf of the Department, the learned AR Shri P.S. Reddy reiterated the findings in the impugned order. He submitted that under Section 35C, the Department is empowered to start recovery of the dues and therefore the appropriation of Rs.29,34,402/- is legal and proper.
5. I have heard both sides. It is clear from the narration of facts that the original authority/Department has appropriated the dues arising out of Order-in-Original dt. 13/01/2006, of which the appeal is still pending before the Tribunal and has not attained finality. Further it is also not disputed that the Tribunal has granted stay of recovery of the amount. In such circumstances, it was highly erroneous for the Department to appropriate the sum of Rs.29,34,402/- from the sanctioned interest refund of Rs.33,11,946/-. The decision relied on by the learned counsel for the appellant makes it crystal clear that the Department cannot pursue with recovery of dues during the pendency of the appeal when stay has been granted. The relevant judgment passed by the Honble High Court of Punjab & Haryana reported in 2013(290) ELT 3 (P&H) held as under:-
43.?Thus, an aggrieved party such as an assessee could only file appeal along with an application for waiver of the pre-deposit. It is, thereafter, for the public functionary i.e. Commissioner (Appeals) or the Tribunal to pass an order on such appeal and/or application. The decision on appeal and on application is not within the power and control of the assessee, but depends upon the acts of public functionary. The provisions of a Statute relate to performance of a public duty. The failure of the Appellate Authority to decide appeal and/or application would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty. In view of the said principle, we find that the Commissioner (Appeals) is discharging a public duty and that failure to decide an application for waiver of deposit would lead to serious injustice to the assessee, who has no control over the Commissioner (Appeals), who is entrusted with the duty to decide such application. Therefore, such provision is only directory.
44.?The Circular is purportedly issued in terms of judgment in Krishna Sales (P) Ltd. case (supra). The said judgment lays down that mere filing of an appeal does not operate as stay or suspension of the order appealed against. But the Board over-looked the fact that the assessee is not seeking stay only on account of filing of an appeal, but for the reason that the assessee has sought dispensing with the pre-deposit of duty demanded and penalty levied and has a right to demand decision on such application, the right which is created by the Statute. Therefore, the very basis of the Circular is untenable, misconceived, wholly illegal and arbitrary. Therefore, the condition of recovery, if no stay is granted within 30 days, is illegal, arbitrary, unjustified and consequently set aside.
46.?Therefore, we are of the opinion that right of consideration in appeal and on an application for waiver of pre-deposit, is a right conferred by the Statute and such right cannot be defeated on the basis of Circular, which contemplates that the recovery can be effected, is stay is not granted within 30 days. Therefore, such condition in the Circular is not legal and is therefore set aside with the observation that till such time, the application for waiver of pre-deposit is decided in an appeal filed in terms of the Statute, the Revenue shall not proceed to recover the same provided that the assessee does not delay the hearing of the appeal directly or indirectly. In the event, the assessee is delaying the decision, the Revenue shall be at liberty to move an application before the Commissioner (Appeals) to take the application for waiver of pre-deposit and seek orders thereon in accordance with law. If such an application is filed by the Revenue, the Commissioner (Appeals) shall decide the same expeditiously.
52.?The assessee having preferred appeal and that Tribunal being satisfied that condition for dispensing with the pre-deposit of duty demanded and penalty levied is made out, is compelled to pay the duty demanded and penalty levied, if the appeal is not decided within 180 days. The assessee has no control in respect of matters pending before the Tribunal; in the matter of availability of infrastructure; the members of the Tribunal and the workload. Therefore, for the reason that the Tribunal is not able to decide appeal within 180 days, the vacation of stay is a harsh and onerous and unreasonable condition. The condition of vacation of stay for the inability of the Tribunal to decide the appeal is burdening the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum is sought to be annulled for no fault of assessee. Therefore, in terms of judgments in Anant Mills Ltd. and Seth Nand Lal cases (supra), such condition of automatic vacation of stay on the expiry of 180 days, has to be read down to mean that after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in the manner mentioned above, such condition suffers from illegality rendering the right of appeal as redundant.
Following the decision in the above case and also appreciating the facts, I hold that the appropriation of Rs.29,34,402/- is not legal and proper. Therefore I hold that the appellant has to be sanctioned the entire amount of Rs.29,34,402/-. In the result the appeal is allowed with consequential reliefs, if any.
(Pronounced and dictated in open court) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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