Circular No. 925/15/2010- Central Excise,
dated 26-5-2010
It has come to the notice of the Board that there is lack of clarity in implementation of the provisions of section 35C(2A) of the Central Excise Act, 1944. In this regard attention is invited to Section 35C(2A) of the Central Excise Act, 1944 which reads as under :-
“(2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed :
Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order:
Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated.”
A plain reading of the provision (as amended w.e.f. 11-5-2002) indicates that the amendment was introduced with a view to speed up the disposal of cases by the Tribunal and also defeat the designs of unscrupulous parties, who indulge in delaying the decision in the case by seeking prolonged stay etc. The provision, indeed, stipulated that the Tribunal shall strive to dispose cases within three years, as far as possible. It also stated that in case a stay is granted by the Tribunal in an appeal, then the Tribunal should dispose of the appeal within six months from the date of the stay order failing which the stay order would stand vacated at the end of six months from the date of the stay order. This effectively meant that a stay order of the Tribunal would normally be operational for six months and would get vacated thereafter, if the appeal is not decided by then.
2. The abovementioned provision, brought in to effect from 11-5-2002, was examined by the Tribunal as well as the Supreme Court. In the case of IPCL v CCE, Vadodara 2004 (169) E.L.T. 267 (Tri.-LB), it was held by the Tribunal that the Tribunal has the powers to grant extension of stay beyond 180 days. In the case of Kumar Cotton Mills (P) Ltd. v. Commissioner CCE, Ahmedabad-I, 2002 (146) E.L.T. 438 the Tribunal held that, in case of stay orders passed prior to 11-5-2002, the same would be valid till the disposal of the appeal and such stay would not be hit by the second proviso to section 35C(2A). Further, where the order is made after 11-5-2002, the Tribunal’s powers to continue protection so given can not be circumscribed and the Tribunal, on an application made by the party, would be competent to extend the period of stay, [Emphasis supplied].
3. The Apex Court has upheld both the above decisions of the Tribunal and observed that the sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed within the time specified. The reasoning of the Tribunal expressed in the impugned order and as expressed in the Larger Bench matter, namely, IPCL v. Commissioner of Central Excise, Vadodara (supra) cannot be faulted. However, we should not be understood as holding that any latitude is given to the Tribunal to extend the period of stay except on good cause and only if the Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee” [2005 (180) E.L.T. 434 (SC].
4. A harmonious reading of the statutory provision and judicial pronouncements in the matter would mean that while the Tribunals are expected to dispose of cases as stipulated in the above section, nothing prevents them from granting stay beyond six months. However, the extension of stay has to be applied for by the party. Thus, the outcome of the above interpretation would be that, wherever stay period is over and the final decision has not been pronounced, the Department may by a simple letter ask the party to pay and the party would be at liberty to go back to the Tribunal for seeking extension of stay. Coercive measures, without giving an opportunity to the party to seek further extension of stay should be avoided. This is not to say that applications filed for extension should not be contested. Also, in a case where the Commissionerate feels aggrieved by an order of the Tribunal granting stay indefinitely till disposal of appeal, the said Tribunal order could be challenged before the jurisdictional High Court, citing the amended provisions.
Field formations may be advised accordingly
