Recovery of Confirmed Demands during pendency of Stay applications
CBEC has issued its first Central Excise Circular No. 967/01/2013 – CX, dated January 01, 2013 on eve of New Year 2013, for recovery of confirmed demands during pendency of Stay applications. The Circular has rescinded seven previous circulars on the subject matter. The said Circular has brought about a significant shift in the timing of recovery of confirmed demands, where the stay applications are not disposed off by the appellate authorities, within a period of 30 days of filing thereof.
The Board has noticed a Supreme Court judgement delivered in case of Krishna Sales (P) Ltd 2002-TIOL-428-SC-CUS wherein the Court observed that “As is well known, mere filing of an Appeal does not operate as a stay or suspension of the Order appealed against”.
As per this Circular, if a stay application is filed before the Commissioner (Appeals) and CESTAT and if there is no stay within 30 days, recovery action has to be initiated. In case of stay applications before the High Courts and Supreme Court, even this 30 days’ time is not available. Recovery has to be initiated immediately after the orders if there is no stay. A moot question arises à who will come forward to rescue Trade/ Commerce when:
- The Board is aware that CESTAT Bench sitting only intermittently in Bangalore, Chennai & Kolkata and given the pendency of matters before the Appellate Commissioner, it will be very difficult to obtain stay within a period of 30 days after filing of stay petition.
- This Circular is contrary to the provisions of the proviso to Section 35F of the Central Excise Act, in so far as it indirectly imposes a time line of 30 days for disposal of stay petitions by the Tribunal. Hence the same is ex-facie amenable to challenge, being in excess of the statutory provisions.
- The Circular issued by the Board lacks foresight, proper understanding of the real situation – draconian Circular
Members are requested to give their suggestions on said Circular for onward submission to CBEC. Your suggestions may reach us latest by Monday, 7th January 2013 by email.
You may download the Circular from the following link:
https://taxguru.in/excise-duty/recovery-confirmed-demand-pendency-stay-application.html
Bimal Jain
FCA, ACS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: bimaljain@hotmail.com
Author Bio
S.NAGESWARA RAO, TAX CONSULTANT, THE TAXNEST, HYDERABAD
11th January,2013
It appears that the circular will apply to cases confirmed in OIO/OIA/Final Orders passed on or after 01.01.2013 only. For the OIAs passed in December, 2012, the circular may not be applicable. The department is in the edge of initiating recovery action and in one case recovery action already started taking shelter of Sl.No.10 of the table to Para-2 of the Circular. The Sl.No.10 has been issued without any pre-thinking and according to this, there is not even appeal remedy. I confused to understand the Sl.No.10 which includes all cases where Commissioner (Appeals) confirms the demand where no appeal remedy is provided. It would be suffice if Sl.No.10 alone is given and why Sl.Nos.7,8 & 9 are provided. What is the recourse for the cases decided by the Commissioner (Appeals)upto December, 2012 for which appeals (with stay application) flood into CESTAT in and around January/February/March, 2013. As per the circular, department initiates recovery action around February/March/April, 2013, assuming that appeals would be filed after or within the appeal period of 90 days.
Definitely the circular is in exercise of powers over and above the judicial. The poor assessees are at risk paying off the amounts which are primarily confirmed by the Adjudicating Authority/Commissioner (Appeals)without any legal basis and one sided (revenue biased). In most of the cases the remedy is at CESTAT only but who is there to wait for the decision of the CESTAT when once the demand is enforced by the department after filing of appeal and the amounts are locked up indefinitely. Is there any provision for payment of interest if the case is decided in assessee’s favour finally. No doubt the circular leads to controvery and the CBEC may have to redraft it thinking pros and cons of the litigations that may arise.
dear sir,
this is not gift but another example of mass extortion warning.
Regards.
I fully agree with Mr Vimal Jain that this is a draconian Circular particularly when it has become a fashion to pass orders against assessee somehow or the other. The demands are confirmed mindlessly and the assessee is left with no option but to file appeal and get stay from the appellate authorities who have been much more judicious than the field officers specially in such cases where the confirmation of demand is primarily without legal basis.
It is known to everybody that most of the Stay applications are not disposed off within 30 days at Commissioner (A) and CESTAT levels. Then putting deadline of 30 days is definitely an autocratic step which will force many genuine assesses in deep trouble and forcing many of them to close down their business.
This step appears to have been taken to augment revenue in the last quarter of the FY without taking into consideration the consequences thereof.
This Circular should be withdrawn forthwith as the over-zealous field officers under tremendous pressure from the Board will immediately swing into action and make the lives of many assessees miserable.
Regards,
Ashok
I think if CBEC wants recovery this way, then there should also be suitable mandate in the law, directing appellate authorities to dispose off the stay applications within 30 days
I think if CBEC wants recovery this way, they should also be suitable mandate in the law, directing appellate authorities to dispose off the stay applications within 30 days