Appeal against Stay order for requirement of hearing within 180 days- frivolous litigation to be avoided.

PJ/Case Laws/2012-13/1037

Case: COMMR. OF C. EX., JALANDHAR Versus INTERNATIONAL TRACTORS LTD.

Citation: 2011 (272) E.L.T. 190 (P & H)

Issue:- Appeal filed to High Court against stay order of Tribunal – whether appeal required to be heard within 180 days – held, Frivolous appeals and should have been avoided.

Brief Facts:- Respondent is manufacturer of tractors and tractor components falling under Chapter 87 & 84 of the First Schedule to Central Excise Tariff Act, 1985. The components manufactured by the respondent are duly packed in boxes and thereafter are sold. They availed cenvat credit on packing material.

Department objected to taking of credit on packing material.

In appeal, the Tribunal allowed credit of Rs. 6.25 lacs on the goods of full packing of boxes used by them in packing the spare-parts of tractors. It has been observed by the Tribunal that duty was paid on the boxes.

Hence, Revenue is in appeal before the High Court.

Appellant’s Contention:- Revenue contended that respondent never received inputs in the packing of boxes and infact the goods were delivered to the respondent in pallets and hence, the respondent was not entitled to any credit.

Reasoning of Judgment:- The High Court was of the view that this is an avoidable litigation, which the appellant department has undertaken. Firstly, the Tribunal has the discretion of granting stay and dispensing with the requirement of pre-deposit of duty. Secondly, the argument that under Section 35-C(2A) of the Act, the appeal is required to be heard within 180 days, would also be frivolous as the stay order is not co-terminus with the period prescribed for disposal of the appeal. The period of six months laid down therein is not even mandatory as has been held by Hon'ble the Supreme Court in the case of Commissioner of Customs and Central Excise v. Kumar Cotton Mills (P) Ltd [2005 (180) E.L.T. 434 (S.C.)]. Therefore, the department should have been careful in filing such frivolous appeals, which involved unnecessary expenditure and time that could have been devoted on better activities.

Decision:- Appeal dismissed.

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PJ/Case Laws/2012-13/1037

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