In the instant case, the Hon’ble CESTAT, Ahmedabad passed an order extending waiver of pre-deposit/stay of demand beyond the total period of 365 days from the date of grant of initial stay, without passing any speaking order. The Commissioner of Central Excise challenged the same as violation of statutory provisions contained in 3rdproviso to Section 35C(2A) of the Central Excise Act, 1944 (the Excise Act) brought into force vide the Finance Act, 2013.
The Hon’ble High Court of Gujarat held that if non-disposition of appeal within 365 days (total) from date of grant of first stay is not attributable to the assessee, then, the Tribunal may extend stay even beyond 365 days. However, any such extension may be granted only after passing a reasoned/speaking order.Since in the instant case, speaking order was not passed, the Hon’ble High Court remanded the matter to the Hon’ble Tribunal with a direction to pass speaking order.
Our Comments: Important to note changes brought in by the Finance (No. 2) Act, 2014
Effective from August 6, 2014, the Finance (No. 2) Act, 2014 substituted new Section 35F of the Excise Act, which is also applicable for Service tax vide Section 83 of the Finance Act, 1994 and for Customs vide Section 129E of the Customs Act, 1962 prescribing a mandatory fixed pre-deposit of:
a) 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing of appeal before the Commissioner(Appeals) or the Tribunal at the first stage; and
b) 10% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing second stage appeal before the Tribunal.
However, the amount of pre-deposit payable is subjected to a ceiling of Rs 10 Crore.
The said amendment has done away with the requirement of filing stay applications for waiver of pre-deposit, thereby, the controversy regarding extension of stay beyond 365 days from the initial grant of stay in terms of Section 35C(2A) of the Excise Act loses its significance. However, it is to be noted that all pending appeals/ stay applications would be governed by the statutory provisions prevailing at the time of filing such appeals/ stay applications.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)