By TIOL News Service

BANGALORE, MAR 26, 2019: THE present applications were filed u/s 35F of the Central Excise Act 1944 r/w Section 35C(2A) of the Act and Rule 41 of the CESTAT (Procedure) Rules 1982. These had been triggered by communications received by the applicants from the Department, directing payment of duty demanded with interest as well as penalties imposed. While the applicants had filed appeals before the Tribunal against such demands, the same were pending disposal. Besides, the applicants had also secured stay on the operation of such demands, which had been granted. However, at the time of the dispute, the stay order had expired and extention of the same had not been sought for by the applicants.

Upon taking cognizance of the matter, the Tribunal noted that such communications issued by the Department, were based on the decision of the Apex Court in Asian Resurfacing of Road Agency Pvt Ltd & Anr v. Central Bureau of Investigation, upon which the Department had concluded that duty was liable to be recovered from the applicants. The Tribunal then noted that the Department had omitted to consider a crucial part of the Apex Court's judgment and that it considered only that portion of the judgment which was amenable to its cause. The Tribunal held -

"...4. It appears to us that, omitting to peruse the observation in the concurring judgement to the effect that,

'17.... A judgement has to be read as a whole... '

the attention of the jurisdictional officers was inexorably drawn to the direction to

'35.... In an attempt to remedy this, situation, we considered appropriate to direct that in all pending cases where stay against proceedings of a civil criminal trial is operating, the same will come to an end on expiry of 6 months from today unless in an exceptional case by a speaking order such stay is extended.'

for initiating steps to implement the said judgement of the Hon'ble Supreme Court..."

Thus the Tribunal noted that the present situation would not have cropped up had the officials concerned applied their mind to the judgment as a whole, instead of selectively culling out certain expressions therein.

The Tribunal further noted that the findings of the Apex Court had been rendered in respect of trial courts. Drawing a comparison with the facts of the present case, the Tribunal held that -

"...7. The ambit of the decision of the Hon'ble Supreme Court is restricted to one aspect of appeals and, that too, pertaining to trial courts. This Tribunal is not a trial court; it is an authority established to dispose off appeals at the first or second level, as the case may be. The stay ordered by Tribunal is on the recovery of amounts not covered by the pre-deposit determined then; the proceedings before the lower authorities had concluded and the jurisdiction of the Tribunal had been triggered by the filing of the appeals. The facts thus set out are not congruent with the template of the law laid down by Hon'ble Supreme Court in re Asian Resurfacing of Road Agency Pvt Ltd. The proceedings that were attempted to be interfered with by the implied communications issued by the various officers in the field are not intended to be covered in the said judgement..."

Hence the Tribunal held that the officials concerned had disregarded the application of the Apex Court's directions as laid down in the Asian Resurfacing of Road Agency Pvt Ltd & Anr judgment itself. It also held that the officials had intervened in matters which were pending before the Tribunal and stayed by the Tribunal in exercise of its statutory powers. In this regard, the Tribunal held that -

"...9. After examining the amendments effected to section 35C of Central Excise Act, 1944, the power vested in the Tribunal to decide upon continuation of stay of operation of impugned order, in circumstances of the appellant being helpless in the matter of disposal of appeal, is clearly delineated there. Therefore, the proper course of action for the officials was to approach the Tribunal for vacation of the stay. In the absence of such application, we hold that the stay order will continue to operate till the appeals herein are disposed off..."

With these directions, the Tribunal quashed the communications issued by the Department and held that the stay earlier granted by the Tribunal would continue to operate.

(See 2019-TIOL-861-CESTAT-BANG)