Bhatia and Company vs Union of India

Instant bunch of petitions since involves common question, hence being decided by the present order. Instant petitions u/Art. 226 of the Constitution of India have been filed assailing the Circular dated 1-1-2013 of the Central Board of Excise and Customs (C.B.E. & C.) issuing certain directives to the concerned authorities for initiation of recovery proceedings against confirm demand while the proceedings remained pending before the appellate authorities in supersession of such circulars issued in this regard by the Department from time-to-time for its implementation with immediate effect.

The assessees are basically aggrieved by the stipulation which has now been brought into force and the effect of which is that although the stay application has been filed along with the appeal is pending before the competent appellate authorities/CESTAT, recovery of such demand shall be proceeded on the expiry of stipulated period, however, in certain cases immediately.

The contention of the counsel for the petitioner is that coercive methods could not be permitted for initiation of recovery proceedings pending stay applications and could not be disposed of due to unavailability of appellate authority and without any default on the part of the assessee and there is no such allegation that delay in disposal of stay application is attributed to the assessee petitioners and still if recovery is being permitted to be made in terms of the directives issued by the Department vide its Circular dated 11-1-2013 and the stay application remained pending on the file of the decision making authority it penalized the assessee for the situation over which the assessee has no control and such action in the guise of Circular dated 11-1-2013, would be treated to be arbitrary and violative of Art. 14 of the Constitution.

The Circular dated 1-1-2013 came to be examined by the Division Bench of High Court of Bombay in the bunch of petitions and that came to be decided vide judgment dated 1-2-2013 Larsen and Toubro Limited Vs. The Union of India and Others, and taking note of the fact situation, the Division Bench of the High Court of Bombay after examining the mechanism which has been provided under the provisions of central Excise Act, 1944 and Customs Act, 1962 and cognate legislation in this regard finally observed ad infra:

For these reasons, we have come to the conclusion that the provisions contained in the impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for more that a reasonable period, for reasons having a bearing on the default or the improper conduct of an assessee, recovery proceedings can well be initiated as explained in the earlier part of the judgment.

In the lead writ Petition, the hearing of the application for stay has been adjourned for administrative reasons not bearing upon the conduct of the assessee and the application is now listed on 5 February 2013. In the circumstances, we see no reason or justification for the initiation of recovery proceedings despite the pendency of the stay application before the CESTAT. We would request the CESTAT to take up the stay application for early disposal and preferably within a period of eight weeks of the date on which an authenticated copy of this order is produced before it. We direct that in the meantime no coercive steps for the recovery of the demand shall be initiated.

It is not in dispute, during the course of the hearing, that in none of the present batch of cases, has there been any dilator tactic or improper conduct on the part of the petitioner-assessees as a result of which the applications for stay have remained pending. The stay applications shall be taken up for expeditious disposal, preferably within a period of eight weeks and in the meantime, no coercive steps for the recovery of the demand shall pursued. We accordingly dispose of the petitions in terms of the directions as aforesaid.

Here, in the present proceedings, the appeals have been preferred along with stay applications which are pending before the respective appellate authorities/CESTAT and the stay applications could have not been decided by the authorities as yet and notice for recovery has been issued by the Department after expiry of period stipulated in the fact situation which has been referred to by the Department in its Circular dated 11-1-2013 (Annx. 5).

Counsel for petitioners submits that neither application for exemption has been disposed of nor the appeal has been fixed for hearing as the matter has been aggravated because the recovery of the amount is being effected by taking coercive measures pursuant to Circular of the Department dated 1-1-2013, however, the petitioner desired that its appeal/application for exemption of stay application until heard and disposed of, during the said interim period, the respondents at least should be restrained from taking coercive steps against them.

Apart from what has been observed by the High Court of Bombay in the judgment referred to supra, this Court also finds substance in the submission made that the Central Excise & Customs Act and other cognate acts provide a mechanism of filing statutory appeal along with stay application before the appellate authorities/CESTAT and application submitted u/s. 35F of the Central Excise Act and such like cognate act if kept pending decision for considerable period and during the intervening period if recovery are being effected by adopting coercive process it will certainly harm the assessee and such action will be against the basic tenets of principles of natural justice.

The Division Bench of this Court in Writ Petition No. 1217/2013 disposed of such like petition vide order dated 30-1-2013 and taking note of the grievance of the assessee directed the concerned competent appellate authorities to hear and decide such stay application as early as possible within the time framework fixed by the Court and till pendency of stay application, the respondent Department remain restrained from taking any coercive action against the petitioner-assessee.

This Court is also of the view that if the remedy of appeal has been provided to the assessee with the application of interim relief in the form of stay application either u/s. 35F of the Central Excise Act or relevant provisions of the cognate Act, if any, and the appellate authorities if failed to decide the stay application, obviously after affording opportunity of hearing to the parties, recovery proceedings could not be permitted to be initiated by adopting coercive methods by the Department under the guise of Circular dated 1-1-2013 and it is high time where the respondents are expected to adopt the procedure so that the grievance of such of the assessee is redressed and coercive methods could be deferred while such application for exemption from the condition of pre-deposit is disposed of, at the same time, if such application remained pending for indefinite period that would also affect the rights of the revenue as well which at one stage has been examined by the concerned assessing authority after affording opportunity to the assessee. However, it is not the case of the respondent that either of the petitioner assessee has adopted any dilatory tactics or improper conduct as a result of which the stay application remained pending.

Taking note of such circumstances, this Court is of the view that direction is required to be issued to the appellate authorities/CESTAT to hear and decide the stay application filed along with the appeal as early as possible and till then the respondents Department should be restrained from adopting any coercive method for recovery in pursuant to the impugned order from the assessee petitioners.

Consequently, the petitions are disposed of with the direction to the appellate authorities/CESTAT to hear and decide the stay application of the petitioners as early as possible but preferably within a period of eight weeks of their appearance before the authority. We further direct that in the meantime, no coercive steps for recovery of the demand shall be initiated. The petitioners are directed to appear before the concerned appellate authority/CESTAT where the appeal is pending on 11-3-2013.