Whether the Department should resort to coercive action during the pendency of stay applications?

PJ/Case Laws/2012-13/1554

Case:- Suo Motu Miscellaneous Order No.25453/2013

Citation:- 2013-TIOL-553-CESTAT-BANG

Brief Facts:- The issue under consideration is that whether the Department should resort to coercive action during the pendency of stay applications or not:

(a) unless the case is one where Service Tax/Central Excise duty has been collected but not paid;

(b) unless the case is one of admitted duty/service tax liability [before adjudicating authority/Commissioner (Appeals)] yet to be discharged with interest;

(c) If the case is one where the assessee has deposited the entire duty/service tax liability determined at any stage;

(d) unless the case is one where Commissioner (Appeals) has rejected the appeal on the ground that the appeal was filed beyond the time limit (in such case, Hon'ble Supreme Court has held that no condonation beyond what is allowed In statute can be granted vide Singh Enterprises Vs. CCE, Jamshedpur [2008 (221) E.L.T. 163 (S.C)]) = (2007-TIOL-231-SC-CX).

The CBEC issued Circular No.967/01/2013-CX on 01.01.2013. The circular directed officers of the Department to take steps to recover confirmed demands for duty/interest/penalty wherever there is no order staying recovery. The circular lays down action to be taken in different situations. Because of increased coverage of services for levy of service tax and increasing industrial activity, number of appeals and stay applications being filed have gone up substantially. There is no corresponding increase in number of Benches and unfortunately, for quite some time, vacancies of Members also could not be filled. As a result, the number of appeals pending before this Bench has gone up to 12932 and the number of applications for relief from pre-deposit & for stay against recovery of adjudged dues has reached 3521 as on 28.02.2013. Consequently, for no fault of any of the assessees concerned, stay applications remain pending for long periods, which may not have created any problems before 01.01.2013. But, after issue of the aforesaid circular, officers can resort/do resort to detention of goods/attachment of goods/freezing of bank accounts/requiring service receivers to pay dues to Government during the pendency of stay applications/stay extension applications. Appreciating the difficulties of the assessees, Tribunal’s Bench has been granting ad interim stay after a brief hearing in deserving cases mentioned by the appellants or their authorized representatives/advocates/consultants following the procedure laid down in Chapter XII (Paragraphs 12.22 to 12.25) of the Judicial Manual.

Reasoning of Judgment:- The Tribunal finds that, even after nearly 3 months of issue of the circular, such mentions seeking Intervention show no sign of abatement. For instance, on 27.03.2013, we spent one full hour on such cases only and only thereafter could take up listed matters. Substantial time has been spent in identifying deserving cases & grant of relief of Interim stay. Tribunal also finds that this benefits neither the assessee nor the Revenue. Assessees continue to get notices and approach the Tribunal and officers continue to issue notices generating a lot of additional work for the Registry and the Bench adding thereby to the already grim pendency situation. If the time spent on such mentioned matters could be used to hear the listed stay applications, the Revenue can legitimately expect to gain from pre-deposit orders passed in cases where the assessees fail to make out prima facie case during such time. The circular and actions in pursuance thereof have mostly spoiled these chances of the Revenue.

Based on the experience gained over nearly three months, The Tribunal feels that the time is ripe for us to pass a general order which would ensure that the Department cannot resort to coercive action in all cases where stay applications/stay extension applications are pending. We are of the view that the Department should not resort to coercive action during the pendency of stay applications:

(a) unless the case is one where Service Tax/Central Excise duty has been collected but not paid;

(b) unless the case is one of admitted duty/service tax liability [before adjudicating authority/Commissioner (Appeals)] yet to be discharged with interest;

Therefore The Tribunal direct that, in the cases falling within the exceptions listed above, the field formations coming within the jurisdiction of this Bench of the Tribunal shall not resort to any action as proposed in the Board's Circular. We further direct that, where such action is proposed, the officer initiating action shall clearly indicate that he is satisfied that the assessee/person does not fall in any of the said exceptions.

In our opinion, this order is necessary to prevent the abuse of the Tribunal's process and to meet the ends of justice as contemplated in Rule 41 of CESTAT (Procedure) Rules, 1982.

In view of the huge pendency of stay applications, we also consider it necessary that some procedural modifications are required. Accordingly we make it clear that, where the Commissioner of Central Excise/Customs/Service Tax thinks that the assessee does not have a prima facie case & pre-deposit is to be ordered and where the Duty/Service Tax/CENVAT credit demanded is more than Rs. 1 crore, it will be open to the Commissioner concerned to file an application for out-of-turn hearing of the stay application filed by the assessee, certifying both the aspects. Such applications shall be listed to be considered within 30 days of filing.

This order shall be sent forthwith to all Chief Commissioners within the jurisdiction of this Bench of the CESTAT for immediate circulation and compliance. It is also made clear to all concerned that the existing procedure of mention of matters discussed in this order shall not continue beyond 15.04.2013.

Decision:-Tribunal directed that the Department should not resort to coercive action during the pendency of stay applications except in few situations.

Comment:- This case reflects the position that for no fault of the assessees concerned, stay applications remain pending for long periods, which may not have created any problems before 01.01.2013 but, after issue of the aforesaid circular, officers can resort to detention of goods/attachment of goods/freezing of bank accounts/requiring service receivers to pay dues to Government during the pendency of stay applications. This has increased the burden of the Tribunal generating a lot of additional work for the Registry and the Bench adding thereby to the already grim pendency situation Hence, a general order has been passed.

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PJ/Case Laws/2012-13/1554

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