Circular No. 524/20/2000-CX

F.NO. 390/24/99-JC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi, the 6, April, 2000

Subject: Pre-deposit waiver – guidelines for disposing of applications by commnr.(Appeals)

Please refer to your letter C.No. IV/16/303/99-CZO dated 7.1.2000 on the above subject and Board’s instructions issued vide F.No., 390/24/99-JC dated 30.3.99. Vide your letter you have drawn attention of the Board to the fact that Commissioner (A), Chennai after considering representations have issued orders asking the appellants to pre-deposit certain amount of duty without grant of personal hearing (reying on the Supreme Court’s decision in CA No. 3597 of 1995 dated 25.3.96 in the case of Union of India vs M/s Jesus Sales Corporation, reported in 1996 (83) ELT 486 (SC) and the Board’s Circular No. 450/16/99-CX dated 30.3.99) and rejected the appeals for non-compliance with the requirements of pre-deposit, and that CEGAT, chennai has held in two such cases that since the Supreme Court Judgement was not with reference to Sec. 35A of Central Excise Act, the Commissioner (A) has to grant a PH before passing final orders of rejection. CEGAT has accordingly set aside orders rejecting appeal and remanded the appeals to Commissioner (A), Chennai.

2. You would be aware that Board had directed field Officers not to take coercive action for the realisation of arrears of revenue till disposal of stay application by Commissioner (A). The aforesaid instructions date 30.3.99 were issued for ensuring speedy disposal of stay petitions as a number of High Courts had in the past been taking a view that it was not proper on the part of the Departmental Officers to state recovery action, when the stay petition against the amount confirmed in adjudication was still pending before the appellate authority. In June 98 instructions of the Board, coercive action was to await disposal of stay petition for which one month’s maximum time was given. As dilatory tactics even in disposal of stay petitions were notice, Commissioners (A) were informed in March 99 that in the light of various judicial pronouncements in this regard, there would be no irregularity is stay petitions were disposed of without grant of personal hearing. The aforesaid instructions did not envisage final disposal of the appeal without grant of personal hearing.

Since Section 35A of the Central Excise Act specifically stipulates that “Commissioner (A) shall give an opportunity to the appellant to be heard if he so desires”, prima facie even if party does not comply with the directions on the stay petition asking for full or part deposit of amounts of duty/penalty confirmed, Commissioner (A) is bound to give a hearing to the appellant before he finally decides the appeal if such hearing has been requested. He appears to be free to decide the appeal only on the ground of non-compliance of directions issued under the provisions of Section 35F without going into merits seriously but as the law stands at present it before disposal of appeal a personal hearing is sought it cannot be denied. Commissioners (A) will, therefore, have to take care that this legal requirement is met before finally disposing off any appeal.

3. It would appear from Commissioner (A)’s letter that no hearing was granted before disposal of the final appeal. In such circumstances, the CEGAT appears to have rightly remanded the matters to him for de novo consideration. Such situations can be avoided in future by granting a hearing quickly after disposal of stay petition application and then passing an appropriate reasoned order. It may be noted that even if there is some delay in the final disposal of appeal, Department will be justified in taking recovery action after the stay petition has been disposed off and the directions/ terms fixed by Commissioner for hearing appeal are not complied with.

4.  Incidentally a number of representatives of Chambers and Industry have brought to Board’s notice almost total non-application of mind by some Commissioners (Appeals) while disposing off the stay petitions and ordering full or major part of duties/penalties to be deposited. This has happened in many cases despite hardship ground being pleaded and very substantial case law on the subject being quoted in its favour by the appellant, which strongly supports the appellants case. Some Courts have also entertained writ petitions on this score against such disposal of stay petitions and remanded the cases back to Commissioners (A) for passing fresh reasoned orders.

5.  On the other had some orders passed by the CEGAT and High Courts have been brought to the notice of the Board which dealt with order of dismissal passed by Commissioner (Appeals) for non-compliance with the terms of the stay Orders. In the case of M/s Premier Plastics Piles Indus. Vs. CCE, Bhopal the learned Single Member of CEGAT (NB) vide Final Order No. A/1335/99 dated 25.10.1999 declined to interfere with the Order of Dismissal passed by Commissioner (Appeals) for non-compliance with the terms of the stay order. The Tribunal in the said order held that the appeal under Section 35B against such an order passed by Commissioner(A) under Section 35F was non-maintainable and the appeal filed before CEGAT was dismissed. In the case of L.C. Hotline Column Picture Tubes Ltd vs. UOI (L.P.A. No.200 of 1998), the Gwalior Bench of M.P.High Court while varying the order of the Learned Single Judge of the Same Court directed the appellant to deposit an amount which was more than that ordered to be deposited by the Commissioner (A). It was made clear that in the event of appellant failing to comply with the terms of the High Court Order, the orders of the Commissioner dismissing the appeal for non-compliance would remain intact. The Gujarat High Court in some of the Writ Petitions have quashed the orders of the Commissioner (A) (dismissing the appeals of the parties for non-compliance with the terms of stay orders passed under Section 35F) and remanded back the matters to the Commissioner (A) for passing speaking orders.

6.  Considering the conflicting views taken by the CEGAT and various High Courts on this issue, it has been decided to refer the matter to the Ministry of Law for giving a considered opinion including the views of some learned Law Officer.

7.  In the meanwhile, the Board has observed that the practice of Commissioner (A) passing non-speaking interim stay order is against the intention or even the instructions issued by the Board in March 99 and must be eschewed in future so that such complaints of complete revenue bias and lack of any application of mind by appellate authorities are avoided. It is reiterated that reasoned and speaking orders must be passed while disposing off applications seeking waiver of pre-deposit.

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