FEBRUARY 23, 2010

Amend the Acts to save trees!

By R Raghavendra Rao

NETIZENS may wonder how an amendment to an Act can save trees. If you are an ardent reader of case laws, you will come across a good number of orders of the Tribunal on extension of stay beyond 180 days. Section 35 C of the Central Excise Act, 1944 and Section 129B of the Customs Act, 1962 were amended vide Finance Act 2002 to insert sub-section (2A) according to which where an order of stay is made in any proceeding relating to an appeal filed, 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.

But, unfortunately, due to many reasons like pendency of the cases etc, the final orders could not be passed within 180 days of the stay order. Therefore the appellants were filing Miscellaneous applications for extension of stay beyond 180 days. In Kumar Cotton Mills Pvt Ltd case, the Supreme Court held:

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.

Relying on the above judgement, the CESTAT has been extending stay beyond 180 days and in effect, the Section has almost become inoperative. In the process, the valuable time of the Tribunal is wasted in listing, hearing and passing orders for extension of the stay orders, which in turn is defeating the very objective of introducing the sub-section for faster disposal of the cases. Each order of the Tribunal however small it may be requires at least three legal size papers. We should also add the paper consumed by the applicants for preparing the miscellaneous applications.

Another similar amendment which has also become almost inoperative is the removal of power to remand the case from the Commissioner (Appeals). Section 35A of the Central Excise Act, 1944 and Section 128A (3) of the Customs Act, 1962 were amended vide Finance Act, 2001 to remove the power of Commissioner (Appeals) to remand the matter to the original authority. Even after 2001, the Commissioners (Appeals) continued to remand the cases and the remand orders were upheld by the higher judicial fora by holding that the Commissioner (Appeals) continues to have the power to remand the case even after the amendment in 2001.

Therefore the above provisions should be re-examined to see if they helped in any manner in achieving the desired objective or in the process, become a reason for cutting more trees by generating lot of unproductive paper work.

(The views expressed by the author are strictly personal)