Commissioner of Central Excise, Customs vs Kailash Electricals

Against the order of the Tribunal dated 2-12-2014 granting waiver from pre-deposit of the executed liability and staying the liability during the pendency of the appeal the Central Excise Department has filed the present appeal under Section 35G Central Excise Act, 1944 contending that the interim order passed by the Tribunal was in violation of the third proviso to Section 35C(2A) of the Act, which was inserted by the Finance Act, 2013. For facility the third proviso to Section 35G of the Act is extracted hereunder:

"Provided also that where such appeal is not disposed of within the period specified in the first proviso, the Appellate Tribunal may, on an application made in this behalf by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period, as it thinks fit, not exceeding on hundred and eighty five days, and in case the appeal is not so disposed of within the total period of three hundred and sixty five days from the date of order referred to in the first proviso, the stay order shall, on the expiry of the said period, stand vacated."

The contention of the learned counsel for the Department is that the Tribunal has committed a manifest error in granting unconditional stay which the statute does not permit. It was contended that the interim order, if any, would be operative in the first instance for a period of 185 days, which can only be extended upto maximum period of 365 days upon an application being filed by the assessee.

We find that a large number of appeals are filed by the Department against the interim order passed by the Tribunal against the order extending the stay order and in all these appeals the common ground urged is that the Tribunal has no power to pass stay order unconditionally or extend the stay order beyond 365 days.

A further prayer was made by the learned Counsel for the Department that in the alternative, a direction should be issued to the Tribunal to decide the appeal within a stipulated period. No data has been shown by the Department as to how many appeals are pending before the Tribunal or how many Benches of the Tribunal are functioning.

On the other hand, we have perused from various orders of the Tribunal that the stay order has been extended due to pressure of work before the Tribunal, non-availability of the member, non-availability of the Benches of the Tribunal and non-disposal of the appeal was not attributable to the assessee, namely, that there was no fault of the assessee in delaying the disposal of the appeal.

We however, find that nothing has been indicated by the Department that they had filed any application before the Tribunal for disposal of the appeal out of turn. It seems that the Department is mechanically filing these appeals, which in our opinion is a wastage of the public money and wastage of the precious time of the Court.

Sri S.D. Singh, the learned Senior Counsel appearing for the assessee along with Sri Prateek Dawar states that the Central Government had issued a notification dated 1-11-2013 for creation of additional Benches of the Customs, Excise and Service Tax Appellate Tribunal and one such Bench was to be located at Allahabad. More than one and a half years has elapsed but the Bench has not been created. In this regard, the writ Court has taken cognizance of the matter and passed orders with regard to non-creation of Benches in Writ Tax No. 354 of 2015 on 8-4-2015 and Writ Tax No. 355 of 2015 on 12-5-2015. The learned Senior Counsel further informed that the Commissioner of Central Excise and other authorities were directed to file an affidavit and the matter is to come up on 31-7-2015. Sri S.D. Singh, the learned Senior Counsel has further informed that a Circuit Bench has now been created, which is sitting at Allahabad for a period of one week only.

The fact remains that there are a large number of appeals, which are pending before the Tribunal, which are not being disposed of on account of various reasons. Huge money is involved. Assessees have been made liable to pay huge sum of money. Wherever a case is made out, the Tribunal passes an interim order and extension of the interim order becomes a necessity when the appeals are not being disposed of. Non-extension of the order under the garb of third proviso to Section 35C(2A) of the Act will cause loss to the assessee. We find the Tribunals are extending stay orders because of the non-disposal of the appeal. The non-disposal of the appeals before the Tribunal is also on account that the Additional Benches are not being created.

We, accordingly, issue notice to the Joint Secretary, Ministry of Finance, Department of Revenue, Central Government as well as to the Chief Commissioner of the Central Excise, Lucknow to file their personal affidavits. The Joint Secretary will file an affidavit explaining as to why a permanent Bench is not functioning at Allahabad for disposal of the appeals. The Joint Secretary will also explain as to why the Additional Members are not being appointed. The Chief Commissioner of Central Excise, Lucknow will also file an affidavit indicating as to why these appeals against the stay orders are being filed with the limited prayer that the hearing of the appeal should be expedited when the Department knows that the appeals are not being disposed of by the Tribunal on account of pressure of work. The Chief Commissioner of the Central Excise, Lucknow will justify the expenses that has been incurred in the filing of these appeals.

Issue notice to the Registrar, Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, West Block No. 2, R.K. Puram, New Delhi-110066. The Registrar will also file an affidavit indicating the number of appeals pending before the Tribunal as on 30-6-2015 and will also indicate the number of appeals which are liable to be transferred to Allahabad Tribunal pursuant to the creation of the Bench vide notification dated 1-11-2013.

List on 31-7-2015 along with Writ Tax No. 354 of 2015, M/s. Om Shiv Transport v. Union of India and 4 others and Writ Petition No. 355 of 2015, M/s. Om Transport v. Union of India and 4 others. The Registry is directed to issue notice to the Joint Secretary, Ministry of Finance, Department of Revenue, Central Government and the Chief Commissioner of Central Excise, Lucknow and the Registrar, Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, West Block No. 2, R.K. Puram, New Delhi-110066 within three days by registered post acknowledgment due along with a certified copy of this order.