2006 (2) TMI 377 - AT - Central Excise

Summary

Issues:
1. Coercive recovery proceedings initiated by the Assistant Commissioner of Central Excise.
2. Appeal against demand of duty and penalty.
3. Stay application for waiver of pre-deposit and stay of recovery.
4. Assistant Commissioner's demand notice and coercive action.
5. Compliance with Board's instructions and judicial authorities.
6. Appellants' administrative remedies against demand notice.

Analysis:
1. The matter pertains to the coercive recovery proceedings initiated by the Assistant Commissioner of Central Excise against the appellants after the filing of an appeal against a demand of duty and penalty amounting to over Rs. 2.4 crores and Rs. 1 crore, respectively. The stay application seeking waiver of pre-deposit and stay of recovery was filed simultaneously with the appeal. The Assistant Commissioner issued a demand notice directing the appellants to pay the amounts within a specified period or face attachment of their property under the Customs (Attachment of Property of Defaulters for Recovery of Customs Dues) Rules, 1995.

2. The appellants' Counsel argued that they have a prima facie case against the demand of duty and penalty. They highlighted that the coercive action proposed by the Assistant Commissioner contradicted Circular No. 788/21/2004-CX, which instructs field officers to refrain from taking coercive action until the disposal of the stay petition by the CESTAT. The Counsel also pointed out that judicial authorities support the notion that no coercive recovery proceedings should occur during the pendency of an appeal and stay application against a demand of duty.

3. The Tribunal, comprising S/Shri P.G. Chacko and P. Karthikeyan, opined that the Assistant Commissioner should be restrained from proceeding with coercive actions against the appellants. They emphasized that the Board's instructions were binding on the Assistant Commissioner, and his conduct was deemed high-handed and reprehensible. The Tribunal deemed it necessary to intervene to prevent a breach of discipline and uphold the rule of law. Consequently, the Tribunal ordered a stay on further proceedings pursuant to the demand notice until the final disposal of the stay application.

4. The Tribunal's decision was based on the Assistant Commissioner's failure to adhere to the Board's instructions and the established legal principles governing coercive recovery proceedings during the pendency of an appeal and stay application. The judgment aimed to protect the appellants from irreparable loss and legal injury due to the Assistant Commissioner's actions, emphasizing the importance of upholding discipline and the rule of law in such situations.