CX - CESTAT is right in holding that as per third proviso to s.35C (2A) of CEA, 1944, it has got power to grant extension of stay beyond 365 days from initial order of stay : High Court
By TIOL News Service
CHANDIGARH, JUNE 17, 2016: THE CCE, Rohtak is in appeal before the High Court against the order passed by the CESTAT& claim the following substantial question of law:-
"Whether Hon'bleCESTAT was right in holding that as per the third proviso to Section 35C(2A) of the Central Excise Act, 1944, it has got the power to grant extension of stay beyond 365 days from the initial grant of an order of stay?"
The section 35C(2A) of CEA, 1944, before omission of the three provisos by the FA, 2014 read -
"35C (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.
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 respondent 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 one 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."
After exploring the legislative history of the said provision, the High Court observed that the said provisions have been subject matter of interpretation by various courts. Inasmuch as it has been held thus -
++ Salasar Steel and Power Limited - 2014-TIOL-2657-HC-Chattisgarh-CX - Statutory provision is itself discretionary in nature and its operation would depend upon the facts and circumstances of each case. If despite diligence on the part of the assessee, the Tribunal has not been able to take up the appeal due to pressure of pendency of cases, stay cannot be vacated.
++ Vodafone Essar South Limited - 2015-TIOL-1974-HC-ALL-ST - S.35C(2A) of CEA, 1944 - If the main provision cannot be treated as mandatory, the first, second and third proviso also cannot be treated as mandatory but directory - The three provisos have to advance the cause of justice and not to defeat it - Tribunal is vested with the power to extend the stay order beyond the specified maximum time limit prescribed - There is no provision for making any further application for extension of stay. The appeal filed by an assessee needs to be disposed of within a period of three years and stay orders which have been passed by the Tribunal would continue to remain in force unless it is limited by the Tribunal itself. - Revenue appeals dismissed: High Court
++ Brew Force Machine Pvt. Limited - 2015 TIOL-1873-HC-DEL-CX-LB - Tribunal has the power to grant extension of stay beyond 365 days - The "words" even if the delay in disposing of the appeal is not attributable to the assessee are missing and not incorporated in CE Act - Thus, the bar and prohibition created by enactment of the Finance Act, 2008 to the third proviso to Section 254(2A) of Income Tax Act, would not be applicable to appeals preferred under Section 35C (2A) of the CE Act before CEGAT - Division Bench decision in Haldiram India Pvt. Ltd. over ruled.
++ Pepsi Foods Pvt. Limited - 2015-TIOL-1306 HC-DEL-IT - Tribunal has the power to grant extension of stay beyond 365 days in deserving cases.
++ Kumar Cotton Mills Pvt. Limited - 2005-TIOL-42-SC-CX , interpreting sub-section 2A of Section 35C of the Act as introduced on 11.5.2002 had noticed as under:- 6. 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 vs. Commissioner of central Excise, Vadodara (surpa) 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.
The High Court, however, dissented with the decisions of the Allahabad High Court J.P. Transformers - 2013-TIOL-1152-HC-ALL-ST & Garg Industries - 2014-TIOL-2658-HC-ALL-CE relied upon by the Revenue.
Conclusion: The question posed is answered in the affirmative. Wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases. The appeals filed by the Revenue are dismissed. The Tribunal is directed to decide the appeals expeditiously within a period of six months.
(See 2016-TIOL-1166-HC-P&H-CX)
