Custom, Excise & Service Tax Tribunal
M/S. Shridhar Metal vs Commissioner Of Central Excise, ... on 10 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/88586/14, E/88589/14-MUM [Arising out of Order-in- Original No. 23-26/CEX/COMMR/2014 dtd. 6/5/2014 passed by the Commissioner of Central Excise & Customs & Service Tax. Aurangabad] M/s. Shridhar Metal : Appellants VS Commissioner of Central Excise, Customs & Service Tax. Aurangabad : Respondent
Appearance Shri. A.B. Nawal, Advocate for the Appellants Shri. V. K. Agarwal, Addl. Commissioner(A.R.) for the Respondent CORAM:
Honble Mr. P.K. Jain, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of hearing: 10/2/2015 Date of decision: /3/2015 ORDER NO.
Per : Ramesh Nair These appeals are listed for maintainability as appellants have not deposited required pre-deposit of 7.5% of the duty amount in terms of Section 35F of Central Excise Act, 1944.
2. Shri. A.B. Nawal Ld. Cost Accountant appearing on behalf of the appellant submits that as per Section 35F deposit of 7.5% of duty amount is required to be made in order to entertain the appeal by this Tribunal. It is his submission that as per the said provision, the appellant is not required to make a pre-deposit of 7.5% either at the time of filing of the appeal with the Tribunal or at any stage before the Tribunal proceed to entertain the appeal. He submits that in the context of Section 35F entertain means when the appeal is taken up for hearing on merit at the time of hearing of the appeal, the amount of 7.5% of duty should stand deposited. It is not mandatory to make this deposit before the Tribunal entertains the appeal that means before hearing of the appeal on merit. In support of his contention he refers to Section 35B of Central Excise Act, 1944, according to 35 B(i) D(i) the discretion of Appellate Tribunal to refuse or to admit an appeal is provided in certain circumstances but the appellant is not covered under such circumstances, therefore this Tribunal can not refuse to admit the appeal only for want of 7.5% deposit as provided under Section 35F. He also refers sub-section (5) of Section 35B wherein the discretion of appellate Tribunal for admission of an appeal is provided when the appeal is filed after the expiry of stipulated time period for filing the appeal. It is his submission that in view of 35B (i) D(i) and subsection (5) it is clear that there is no discretion available to the Tribunal not to admit the appeal for want of deposit of 7.5%. As regard the term entertain provided under Section 35F he refers to the dictionary meaning of entertain according to which entertain means to give judicial consideration and it also means to admit a thing for consideration. In this support he relies upon Honble High Court judgment in case of [1968 AIR 488 SCR(1) 505] Lakshmi Rattan Engineering works Ltd. Vs. Asst. Commr. Sales Tax, Kanpur & Anr. wherein in context with Section 9 of U.P. Sales-Tax Act (U.P. 15 of 1948) the meaning of word entertain is given as entertain means point of time when the appeal is being considered. He also relies upon Honble Allahabad High Court judgment in case of [AIR 1963 All 320] Haji Rahim Bux and Sons and Ors. Vs. Firm Samiullah and Sons wherein Honble Court agreed that the word entertain provided under Rule 90 of the Code of Civil Procedure means not receive or accept but proceed to consider on merit or adjudicate upon. He also referred the Honble Allahabad high Court judment [AIR 1963 ALL 547] Kundan Lal Vs. Jagan Nath Sharma wherein the Honble High Court dealing with the word entertain provided in Rule 90 of the order XXI of C.P.C. held that true intention of the proviso is that compliance of clause B of proviso may be made at any time before the application under Rule 90 of order of XXI C.P.C. comes up for decision by the court on merit. On the similar issue, Ld. Counsel Shri. Nawal relies upon Kerala High Court Judgment in case of [AIR 1991 Ker 253] Nanu Vasudevan Vs. Kalikarthiayaniamma And Anr. wherein the word entertain as interpreted, means shall not admit to consideration and held that disability of the court is not in relation to mere receipt of the plaint or about the filing of the suit as such, but about an effective consideration of the question. In view of above judgments, it is his submission that the provision of Section 35 F wherein the Term Tribunal shall not entertain any appeal .unless appellant has deposited 7.5% of duty. means the Tribunal can not refuse to accept and admit the appeal only for non deposit of 7.5% of the duty amount. Whenever the appeal is taken up for hearing and consideration on merit, till that time the appellant is at liberty to deposit the amount of 7.5% and before that appellant can not be insisted upon to deposit the said amount of pre-deposit.
3. On the other hand, Shri. V. K. Agarwal, Ld. Addl. Commissioner (A.R.) submits that in terms of Section 35 F, the deposit of 7.5% is mandatory and the same is required to be deposited and compliance of the same to be made at the time of filing the appeal. He refers to Circular F. NO. 15/ CESTAT /General /2013-14 dated 14/10/2014 issued by this Tribunal with the approval of the President of the Tribunal according to which no exemption has been contemplated either in the amended provision of the Act statutes, or even in the clarificatory circular issued by the CBEC on the subject. It is his submission that in view of the said circular the payment of 7.5% is mandatory requirement for filing the appeal before this Tribunal. He also brought to the notice of this Bench that as per Clause 98 of Finance Bill 2014 it seeks to substitute to Section 35 F of the Central Excise Act and objective of the said amendment is to provide for deposit of certain percentage of duty demanded or penalty imposed or both, before filing the appeal, therefore 7.5% of the duty amount has to be deposited before filing of the appeal. Ld. A.R. refers to CBEC Circular 984/A/2014-CX dated 16/9/2014 according to which the payment of 7.5% is required to be made at the time of filing of the appeal. In view of these position of law he submits that unless 7.5% deposit is made by the appellant the appeal is not maintainable and the same deserves to be dismissed for non-payment of such deposit.
4. We have carefully considered the submissions made by both the sides and perused the record.
5. Provision of deposit of 7.5% is made under Section 35F which is reproduced below:-
[SECTION 35F.?Deposit of certain percentage of duty demanded or penalty imposed before filing appeal. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal
(i) under sub-section (1) of section 35, 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 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 the decision or order appealed against;
(iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten 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 the decision or order appealed against :
Provided 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 payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004.] In view of the section 35 F, the statute provides that appeal shall be entertained only when the 7.5% or 10% as the case may be of duty is deposited. As regard the submission of Ld. Counsel that the appeal can not be dismissed for want of said deposit due to the reason that deposit is required only for entertaining the appeal by the Tribunal, we are of the view that as regard appeal procedure in this appellate Tribunal, the moment appeal is filed, it attains the stage of entertaining the appeal by the Tribunal. Unlike procedure in the Honble High Court and Honble Supreme Court, there is no procedure in this Appellate Tribunal for motion hearing on admission of the appeal. In this Tribunal when the appeal is filed it is registered and appeal number is allotted and thereafter the appeal is matured for considering on merit. Therefore since there is no provision of admission of the appeal in this Tribunal the moment the appeal is filed it stands admitted and become due for consideration on merit. Therefore the mandatory deposit of 7.5% or 10% as the case may be is required to be deposited by the appellant and to be complied at the time of filing of the appeal itself. We have perused old Section 35F of the Central Excise Act, 1944 and 129E of the Customs Act, 1962, according to which the appellant was allowed to file an appeal only after deposit entire adjudged amount and alternatively, if he so desires that the deposit of adjudged dues would cause undue hardship, it was provided discretion to the Tribunal to waive the pre-deposit of such amount on an application by the appellant. After the amendment, intention of the legislature is that instead of 100% of the adjudged dues the appellant is required to pay only 7.5% or 10% as the case may be of the duty or penalty. Therefore it can not be interpreted that as per the amended Section 35 F now the appellant can file the appeal without any deposit. We have also gone through objective as given in explanatory notes on the finance bill, 2014 regarding amendment of 35 F which is reproduced below:
Clause 98 of the Bill seeks to substitute section 35F of the Central Excise Act to provide for deposit of certain percentage of duty demanded or penalty imposed or both before filing an appeal. It also seeks to provide that the provisions of this section shall not be applicable to stay application and appeals before the Appellate Authorities prior to the enactment of the Bill.
From the above it can be observed that the objective of the amendment also clearly indicates that amount of 7.5% or 10% as the case may be, is required to be deposited before filing the appeal. We also perused the Board Circular dated 16/9/2014, which made it clear that the deposit of 7.5% or 10% as the case may be, should be made before the filing of the appeal. Similar view was expressed in Ministrys F.S./TRU Letter D.D.E. No. 334/15/2014-TRU dated 10/7/2014 which is reproduced below:
13) Section 35F is being substituted with a new Section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with Commissioner(Appeals) or the Tribunal of the first stage and another 10% of the duty demanded or penalty imposed or both; for filing second stage appeal before the Tribunal. The amount of pre-deposit payable will be subject to ceiling of Rs. 10 crores.
From the above TRUs letter, it becomes clear that the intention of the legislature is that the deposit of 7.5% or 10% is required for filing appeal. Therefore objective and purpose of amended provision 35F is to make deposit of 7.5% or 10% in order to filing of appeal in this Tribunal. It is settled law that interpretation of law should be made keeping in mind the purpose and objective of the statutory provision which is under interpretation. On this issue we take reliance from the following judgments:
(a) [2009(233) ELT 3(SC)] Corporation bank Versus Saraswati abharansala
25.?Furthermore the Notification having been given a retrospective effect must be construed on the touchstone of the purpose and object it sought to achieve. Principle of purposive construction should be applied in a case of this nature to find out the object of the Act. When a statute cannot be considered in such a manner which would defeat its object, the legislature is presumed to be aware of the consequences flowing therefrom. The statute should be considered in such a manner so as to hold that it serves to seek a reasonable result. The statute would not be considered in such a manner so as to encourage defaulters and discourage those who abide by the law.
(b) [2012 (286) E.L.T. 321 (S.C.)] Commr. Of C. Ex., New DelhiVersus Connaught Plaza Restaurant (P) Ltd.
16.?The general rules of interpretation of taxing statutes were succinctly summarized by this Court in Oswal Agro Mills Ltd. & Ors. v. Collector of Central Excise & Ors. - 1993 Supp (3) SCC 716 at page 720 = 1993 (66) E.L.T. 37 (S.C.); as follows :
4.?The provisions of the tariff do not determine the relevant entity of the goods. They deal whether and under what entry, the identified entity attracts duty. The goods are to be identified and then to find the appropriate heading, sub-heading under which the identified goods/products would be classified. To find the appropriate classification description employed in the tariff nomenclature should be appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon. For exigibility to excise duty the entity must be specified in positive terms under a particular tariff entry. In its absence it must be deduced from a proper construction of the tariff entry. There is neither intendment nor equity in a taxing statute. Nothing is implied. Neither can we insert nor can we delete anything but it should be interpreted and construed as per the words the legislature has chosen to employ in the Act or rules. There is no room for assumption or presumptions. The object of the Parliament has to be gathered from the language used in the statute ..
*** ?????***????????*** Therefore, one has to gather its meaning in the legal setting to discover the object which the Act seeks to serve and the purpose of the amendment brought about. The task of interpretation of the statute is not a mechanical one. It is more than mere reading of mathematical formula. It is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts. It is also idle to expect that the draftsman drafted it with divine prescience and perfect and unequivocal clarity. Therefore, court would endeavour to eschew literal construction if it produces manifest absurdity or unjust result. In Manmohan Das v. Bishun Das : (1967) 1 SCR 836, a Constitution Bench held as follows :
The ordinary rule of construction is that a provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out.
(c) [1987 AIR 1023] Reserve Bank of India 1.2 Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when the object and purpose of its enactment is known. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute maker, provided by such context its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses the court must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation.
In the above judgments, it is settled that interpretation of statute has to be made keeping in view the purpose and objective for which such statute was enacted. In the present case, from the comparison of old Section 35F and amended Section 35F, TRUs letter and finance bill explanatory notes, it is clear that present provision of depositing 7.5% or 10% is made for filing the appeal. As regard the various judgments relied upon by the Ld. Counsel on the interpretation of word entertain, respectfully considering all those judgments, we are of the view that even if it is accepted that the meaning entertain is to consider the matter on merit, the stage of considering the appeal on merit by the Tribunal starts right from the filing of the appeal, therefore even following the ratio of the judgments relied upon by the Ld. Counsel, we are of the considered view that particularly in the appeal procedure in this appellate Tribunal the stage of entertaining the appeal by this Tribunal is right from the date of filing of the appeal, therefore at the time of filing of the appeal, the appellant is required to make deposit of 7.5% or 10% as the case may be.
5.1 In view of the above discussion, we are of the considered view that as per Section 35F of Central Excise Act, 1944 and Section 129E of Customs Act, 1962, the appellant is required to deposit 7.5% of duty amount before filing of appeal and to furnish the proof of such payment alongwith appeal filed in this Tribunal. Therefore, we direct the appellant to deposit required amount of 7.5% of the duty including amount already deposited, if any, against confirmed duty within a period of 4 weeks from today and compliance of such deposit to be made on ------.
(Operative part pronounced in the Court on /3/2015)
P.K. Jain
Member (Technical)
Ramesh Nair
Member (Judicial)
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