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CBEC Drops a BOMB- SHELL as a new year gift !!
03 January, 2013 Ahmedabad :
CBEC Drops a BOMB- SHELL as a new year gift !!

CBEC came with a new year gift to all the litigants, who are waiting for justice before various quasi-judicial forums, appellate authorities and Hon’ble Courts an Tribunals. There is going to be havoc on the streets when this circular is going to be ‘actually implemented’ in its ‘true sense’.

The Circular No. 967/01/2013 – CX dated 1-1-2013 has been issued and the layout plan of recovery action has been given to the officers where cases are pending before appeals / stay applications have been pending over the years. The olden-golden circulars / instructions on ‘recovery’ have been rescinded and re-drafted as below.

“Henceforth, recovery proceedings shall be initiated against a confirmed demand in terms of the following order –

Sr. No  Appellate Authority  Situation Directions regarding recovery.
1  NIL No appeal filed against a confirmatory order in original against which appeal lies with Commissioner (Appeals). Recovery to be initiated after expiry of statutory period of 60 days for filing appeal.
2 Commissioner (Appeals) Appeal filed without stay application against a confirmatory order in original. Recovery to be initiated after such an appeal has been filed, without waiting for the statutory 60 days period to be exhausted.
Commissioner (Appeals) Appeal filed with a stay application against an order in original. Recovery to be initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any specified, whichever is earlier.
4 NIL No appeal filed against an Order in Original issued by the Commissioner Recovery to be initiated after expiry of statutory period of 90 days for filing appeal from the date of communication of order.
5 CESTAT Appeal filed without stay application against an Order in Original issued by the Commissioner. Recovery to be initiated on filing of such an appeal, without waiting for the statutory 90 days period to be exhausted.
6 CESTAT Appeal filed with a stay application against an Order in Original issued by the Commissioner. Recovery to be initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier.
NIL  No appeal filed against an Order in Appeal issued by a Commissioner (Appeals) confirming the demand for the first time. Recovery to be initiated after expiry of statutory period of 90 days for filing appeal from the date of communication of order.
8 CESTAT Appeal filed without stay application against an Order in Appeal confirming the demand for the first time. Recovery to be initiated on filing of such an appeal in the CESTAT, without waiting for the statutory 90 days period to be exhausted.
9 CESTAT Appeal filed with a stay application against an Order in Appeal confirming the demand for the first time. Recovery to be initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier.
10 CESTAT All cases where Commissioner (Appeals) confirms demand in the Order in original. Recovery to be initiated immediately on the issue of Order in Appeal.
11 High Court or Supreme Court Tribunal or High Court confirms the demand. Recovery to be initiated immediately on the issue of order by the Tribunal or the High Court, if no stay is in operation.

More interestingly, an old judgement of Hon’ble Supreme Court in case of Collector of Customs, Bombay Vs Krishna Sales (P) Ltd [1994 (73) E.L.T 519 (S.C) = CIO 1993 SC 5] has been referred in the said circular to justify their Act. But, the said judgement does not even speak of any recovery proceedings pending adjudication or stay applications or appeals.

The above judgement is related to customs matter wherein Customs department had preferred an appeal before the Hon’ble Supreme Court, against an order of the Hon’ble CESTAT, involving detention charges of goods. The relevant paras of the said judgement is as below. The para 6 reads as,

6. …If the authorities are of the opinion that the goods ought not to be released pending the Appeal, the straight-forward course for them is to obtain an Order of Stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an Order they cannot refuse to implement the Order under Appeal. As is well-known, mere filing of an Appeal does not operate as a Stay or suspension of the Order appealed against. Moreover, such detention is likely to create several complications relating to the demurrage charges besides the possible deterioration of the machinery and goods. . . ."

It will really take rocket science to correlate the Hon’ble Supreme Court’s Judgement on Customs issue of demurrage charges between a custodian port and the importer, who got a favourable order from the CESTAT, and the recovery proceedings suggested by the above table.

It is not at all logical to construe a 1994 judgement today, and issue such a circular, when most of the appellate authorities and the Hon’ble CESTAT are already full loaded with appeals/stay applications/ misc application, MODs ROMs, etc, and still exponentially counting.

How can this circular help the department in recovering the dues when the assessee is not in agreement with the confirmed order. The assessee has a constitutional right to appeal. Is it not that this circular is ultra vires of the Sections 35 to 36 (chapter VI) of Central Excise Act, 1944 and similar provisions in the Finance Act (for service tax) and Customs Act, 1962.

This act of CBEC, would give further boost to the officers to indefinitely harass the assessees on the pre-text of recovery proceedings, as everyone knows beyond doubt that that getting a stay order within 30 days from the Hon’ble CESTAT or from the Commissioner (Appeals) office or even from Hon’ble High Court is ruled out. Hence, the ‘rates’ for not harassing will be fixed/revised, and the saga will go on. . .

Before parting . . .

What are we up to.The CBEC should be sensible to the ground realities of the pendency status at various levels, and recovery should be taken up looking into various factors like (1) the merits of the case, (2) financial difficulties, and should be settled amicably, so that the assessee would not lose confidence in the judicial system, and proactively come forward to comply.

Courtesy: From the desk of R.Subramanya, Advocate.
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