CBEC's Draconian Circular - All Roads Lead to HC
THE CBEC's draconian recovery Circular No. 967/2013 dated 01.01.2013 (DDT 2015 - 02.01.2013) has spurred Central Excise officers into issuing threatening notices to assessees whose cases are pending in appellate forums. The poor assessees have no option but to rush to the High Courts. Yesterday, nine petitions came up in the Andhra Pradesh High Court seeking:
1. to issue a Writ, Order or direction particularly one in the nature of a WRIT OF CERTIORARI quashing the clarification issued vide Circular No. 967/01/2013-CX dated 01.01.2013.2. to grant stay of clarification issued vide Circular No.967/01/2013-CX dated 01.01.2013
The High Court has granted interim stay and stayed the recovery of the demand till the appellate authorities decide the stay applications. The High Court also made it clear that the assessee shall be bound by the orders of the appellate authority and the pendency of the writ petition before the High Court would not be a bar against the appellate authorities' order.
THE report in yesterday's DDT on the AP High Court's Order evoked huge response, mostly from lawyers. They were all asking for a copy of the order. We carry the order today. Please see 2013-TIOL-23-HC-AP-CX
The whole order is as given below:
Petition under Section 151 of C.P.C. praying that in the circumstances stated in the affidavit filed in the W.P. the High Court may be pleased to grant stay of clarification issued vide Sl.No.3 of the Circular No.967/01/2013-CX dated 01.01.2013 and consequent Letter O.C.No.496/2012-13 dated 04.01.2013 issued by the Respondent No.2, pending disposal of WP No. 734 of 2013 on the file of the High Court.The court, while directing issue of notice to the Respondents herein to show cause as to why this petition should not be complied with, made the following order.(The receipt of this order will be deemed to be the receipt of notice in the case).ORDERThere shall be interim stay of recovery of the amount involved, till the appellate authority disposes of the application for stay.
There were nine such writ petitions challenging various provisions of the controversial circular. Though the High Court did not quash or stay the Circular, the recovery of the amount involved has been stayed.
In the next few days all High Courts in the Country will be flooded with such writ petitions - the lawyers should be grateful to the CBEC for this most unexpected prosperous New Year gift.
When I discussed the issue with a senior advocate, he asked me, "What are you complaining about? When you are in the business of selling coffins, you should be happy about people dying; if they don't die, how can you sell your coffins?"
Recovery of Service Tax and Customs Dues not Governed by Draconian Circular
A netizen sent us this mail -
"Sir, while every taxation portal & publication is abuzz with the supposedly foolhardy Circular 967 issued by the CBEC when the sun rose on the Indian sub-continent this New Year and mention of petitions being filed in the High Court seeking to strike down this Circular, I know for sure that the women-powered Board would stand by its decision unless of course they have a change of heart.
That apart, the Circular has been issued under the File number having extension CX.6 and which means it purely relates to Central Excise matters.
For the benefit of readers, I would like to extract the following paragraph 5 from the Board Circular 661/52/2002-CX dated 11.09.2002 (as updated) & titled ‘Work distribution amongst various sections of CBEC". It reads -
"5. CX-6 Section
List of Subject :-
1. Amendments to Central Excise Rules and interpretation thereof (excepting matters relating to Modvat, Cenvat, Proforma Credit and sampling)2. Procedures relating to Assessment, Internal Audit, Preventive Control, Exports, Licencing and Bonds, Delegation of powers, overtime fees and Budget and pre-Budget day clearances, prosecution, adjudication, Rewards under Central Excise Act and all other matters not covered by CX-8 Section.3. Amendments to the Basic Excise Manual, the Audit Manual, the Preventive Manual and the S.R.P. Hand book.4. Policy concerning anti-evasion, prosecution, approval of action plan of Directorate General of Central Excise Intelligence, submission of periodical reports and returns concerning preventive work etc.5. All complaints, representations and Parliament Questions relating to the above items of work."
My conclusion is also supported by the paragraph 4 of the Circular 967 which mentions -
"4) Instructions in CBEC's Excise Manual of Supplementary instructions on the above subject or any other circular, instruction or letter contrary to this circular stand amended accordingly."
I would like to place emphasis on this word "EXCISE" because it would mean that the Circular does not apply to "CUSTOMS" although there is in existence a Manual brought out by CBEC catering to Customs also but the Board has chosen to ignore this fact.
Now, this would leave us with "Service Tax" and to this my answer would be - Service Tax Circulars are issued with the extension "ST" and which is not the case here.
So, for the moment, the New Year Circular would be applicable only to Central Excise matters, where the recovery is envisaged in terms of section 11 of the CEA, 1944.
For recovery of Customs & Service Tax dues, the Board may come out with another Circular after reading this note of mine, I presume!"
The High Court of Judicature of Andhra Pradesh has granted an interim stay against Circular No. 967/01/2013 – CX, Dated 1st January, 2013 issued by the CBEC, seeking the recovery of confirmed demand during pendency of stay application.Full text of the Order is as follows :-
ANDHRA PRADESH HIGH COURT AT HYDERABAD
WPMP.NO:873 of 2013 IN WP.N0:730 of 2013
Ultratech Cement Ltd.
Union Of India
Petition under Section 151 of C.P.C. praying that in the circumstances stated in the affidavit filed in the W.P. the High Court may be pleased to grant stay of clarification issued vide SI.No.3 of the circular No.967/01/2013-CX dated 01.01.2013 and consequent Letter C.No.490/2012-13 dated 04.01.2013 issued by the Respondent No.2, pending disposal of WP No. 730 of 2013 on•the file of the High Court.
The court, while directing issue of notice to the Respondents herein to show cause as to why this petition should not be complied with, made the following order.(The receipt of this order will be deemed to be the receipt of notice in the case).
There shall be interim stay of recovery of the amount involved, till the appellate authority disposes of the application for stay.It is made clear that the petitioner shall be under obligation to abide by the order that may be passed by the appellate authority and the pendency of this writ petition shall not be treated as a factor to avoid the liability