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.
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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
Dated- 09.01.2013
WPMP.NO:873 of 2013 IN WP.N0:730 of 2013
Ultratech Cement Ltd.
Vs.
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).
ORDER
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