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Commissioner of Central Excise, Meerut Versus M/s Vodafone Essar South Ltd.

2015 (8) TMI 1056 - ALLAHABAD HIGH COURT

Power of tribubal to extend the stay beyond the period of 365 days - whether the Tribunal is vested with the power to extend the stay order beyond the specified maximum time limit prescribed in Section 35-C(2-A) of the Central Excise Act - Held that:- if the Tribunal would not dispose of the appeal within 365 days under the first, second and third proviso of Section 35C (2A) of the Act which was not attributable to the assessee, it would not mean that the Tribunal was divested with its incidenta .....

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5C (2A) of the Act has no relevance to the pre-deposit of amount under Section 35F of the Act. Once the proviso to Section 35C(2A) of the Act has been omitted, the embargo upon the Tribunal to limit the stay order for a limited period has now been removed. Consequently, the incidental power of the Tribunal to grant interim relief pending disposal of the appeals is now not confined to a limited period. - Tribunal has the power to grant stay as incidental or ancillary to the appellate jurisdiction .....

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Nos. 143-151 of 2015 and Central Excise Appeal Nos. 132-134, 136, 152-154 and 156-158 of 2015 - Dated:- 24-8-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani,JJ. Connected with:-Central Excise Appeal Defective Nos: 143 of 2015, 144 of 2015, 145 of 2015, 146 of 2015, 147 of 2015, 148 of 2015, 149 of 2015, 150 of 2015, 151 of 2015, and Central Excise Appeal Nos: 132 of 2015, 133 of 2015, 134 of 2015, 136 of 2015, 152 of 2015, 153 of 2015, 154 of 2015, 156 of 2015. 157 of 2 .....

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extended the interim order till the disposal of the appeal. The Department, being aggrieved, has filed the appeals questioning the power of the Tribunal to extend the stay beyond the period of 365 days. 3. We have heard Sri Ashok Singh, Sri R.C.Shukla, Sri B.K.S. Raghuvansi, Sri Amit Mahajan and Sri Vinod Kant, the learned counsels for the appellant and Sri S.D.Singh, the learned senior counsel along with Sri Nishant Mishra, Devnath, Sri Ashok Kumar and Sri A.P. Mathur, the learned counsel for v .....

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nal may dispense with such deposit subject to such condition. For facility, the provision of Section 35-F is extracted hereunder: "35-F Deposit, pending appeal of duty demanded or penalty levied.- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, .....

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interests of revenue." 5. Based on the aforesaid provision, the assessee, while filing the appeals under Section 35-B of the Act prayed for dispensation of the requirement of pre-deposit of the duty levied. The Tribunal has passed interim orders. 6. Section 35-C of the Act was amended by Finance Act, 2002 and sub section (2A) was added. For facility, Section 35C (2A) as amended by the Finance Act 2002 is extracted hereunder: (2A) The Appellate Tribunal shall, where it is possible to do so, .....

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iry of that period, stand vacated. 7. Section 35 C (2A) of the Act was further amended by the Finance Act of 2013 wherein a third proviso was added namely: "Provided also that where such appeal is not disposed of within the period specified in the first proviso, the appellate tribunal may, on an application made in this behalf by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period as it .....

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oviso to sub section (2-A) of Section 35C of the Act indicates, that if any order of stay was passed by the Tribunal in which case, the appellate tribunal shall dispose of the appeal within 180 days. The second proviso stated that if the appeal was not disposed of within 180 days then the stay order would stand vacated upon the expiry of 180 days. The third proviso, which was added by the Finance Act, 2013, further stipulated that when the appeal was not disposed of within 180 days, the appellat .....

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ue and two others, decided on 1.7.2014, a Division Bench of this Court held that the Tribunal in an appropriate case can extend the stay order, but not exceeding 365 days, and that, in an appropriate case, the High Court under Article 226 of the Constitution of India could extend the stay order. 12. In L.G. Electronics India Private Ltd. vs. Commissioner of Income Tax, in Writ Tax No.390 of 2015, decided on 22.4.2015, the Writ Court held that Section 35C (2A) of the Act does not prohibit the app .....

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Tribunal under Section 35 C (2A) of the Act had a limited shelf life and that upon the expiry or immediately before the expiry, it would be open to the assessee to move a fresh stay application, which would be decided by the Tribunal in accordance with law. 14. In Commissioner of Customs and Central Excise, Kanpur vs. J.P. Transformers, 2014 (307) E.L.T. 436 (Alld.) another Division Bench of this Court held that the Tribunal did not have the power to extend the interim order after the expiry of .....

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unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the (Principal Commissioner of Central Excise or Commissioner of Central Excise]; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a ha .....

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rovided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014. Explanation. - For the purposes of this section "duty demanded" shall include,- (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount p .....

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2014 as under: "103. In the Central Excise Act, in Section 35C, in sub-section (2A) the first, second and third proviso shall be omitted." 18. Section 35C (2A) of the Act as amended in 2002 and 2013 makes it apparently clear that the Tribunal was mandated to hear every appeal within a period of three years "where it is possible to do so". These words indicate that though a mandate was given to the Tribunal to decide the appeal within three years, it was not a mandatory provis .....

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not dispose of the appeal within 365 days under the first, second and third proviso of Section 35C (2A) of the Act which was not attributable to the assessee, it would not mean that the Tribunal was divested with its incidental powers in not extending the interim order. The three proviso, in our view, cannot be read as mandatory in nature. 20. Order VIII Rule 1 and Order VIII Rule 10 was amended by the Amendment Act No.22 of 2002. By the said amendment, the upper limit of filing the written stat .....

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word "shall" under Order VIII Rule 1 of the C.P.C. by itself was not conclusive to determine whether the provision was mandatory or directory. The use of the word "shall" was ordinarily indicative of the mandatory nature of the provision, but, having regard to the context in which it was used and having regard to the intention of the legislation, the same could be construed as directory. 21. In the instant case Section 35 C (2A) gave a mandate to the Tribunal to decide the a .....

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nce with the main provision. The three proviso have to advance the cause of justice and not to defeat it. The rules of procedure are made to advance the cause of justice and not to defeat it. We are of the view, that the proviso has to be read in the aforesaid manner which will not only promote justice what would prevent miscarriage of justice, inasmuch as, if the stay order stands vacated after 365 days and the appeal is not decided, the appellant would be put to irreparable loss and harm espec .....

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e the appeal within three years, as far as possible, still continues to operate. 24. The omission of the first, second and third proviso to Section 35C(2A) of the Act in effect means that there is no provision for making any further application for extension of stay. The omission of the first, second and third proviso would mean that the appeal filed by an assessee needs to be disposed of within a period of three years and stay orders which have been passed by the Tribunal would continue to rema .....

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