Stay on Recovery – Appeal filed before first Appellate Authority – Stay Application pending – Recovery of the amount by attaching the bank account not justified: Central Excise Act, 1944.

The Revenue proceeded to recover the entire amount by attaching the bank account towards demand on account of service tax and penalty even though the stay application was pending.

The grievance of the Petitioner is that though an appeal has been filed before the Commissioner of Central Excise (Appeals) against an order of adjudication and even the stay application was pending, the Revenue proceeded to recover the entire amount by attaching the bank account. This action was purportedly taken in pursuance of a circular dated 1st January 2013 of the Central Board of Central Excise and Customs.

The Court observed that the circular has been considered and has been dealt with in a judgment of this Court in Larsen & Toubro Limited vs. Union of India (2013) (288) ELT 481 (Bom) wherein the court observed as under:

“….The impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for reasons beyond the control of the assessee. Where however, an application for stay has remained pending for more than a reasonable period, for reasons having a bearing on the default or the improper conduct of an assessee, recovery proceedings can well be initiated as explained in the earlier part of the judgment…..”

The court further observed that there was no reason or justification on the part of appellate authority to keep the stay application pending and take recourse to coercive remedies under the law.

The law laid by the Court on the interpretation of the circular of the Central Board of Central Excise and Customs would bind all authorities who are subject to the jurisdiction of this Court. In this case, we are of the view that the court directed the appeal which has been filed by the Petitioner, to be disposed of expeditiously by the Commissioner of Central Excise (Appeals) within a period of four weeks of the date on which an authenticated copy of this order is produced on the record.

The Court further directed that henceforth the controlling authority shall issue a circular to all the authorities within his jurisdiction that the directions contained in the judgment of this Court in Larsen & Toubro Limited (supra) shall be duly observed.