Allahabad High Court
Devendra Pratap Singh vs Custom Excise And Service Tax Appellate ... on 29 August, 2017
Author: Pankaj Mithal
Bench: Pankaj Mithal
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 3 Case :- CENTRAL EXCISE APPEAL No. - 258 of 2015 Appellant :- Devendra Pratap Singh Respondent :- Custom Excise And Service Tax Appellate & 2 Others Counsel for Appellant :- P.K.S. Paliwal Counsel for Respondent :- Krishna Agarwal, Parv Agarwal Hon'ble Pankaj Mithal,J.
Hon'ble Umesh Chandra Tripathi,J.
Heard Sri P.K.S. Paliwal, learned counsel for the appellant and Sri Parv Agarwal, learned counsel for the respondents.
The appellant is aggrieved by the order dated 30.6.2015 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
It appears that against the order in original dated 30.3.2012, the appellant preferred an appeal which was decided by the order in appeal dated 4.10.2013.
The aforesaid order in appeal was impugned by the appellant before the Tribunal by filing an appeal on 9.1.2014. The appeal was filed by the appellant without depositing any part of the disputed amount of the duty.
The appellant in the said appeal moved an application for stay/waiver of the pre-deposit of the disputed amount of the duty. The said application has been rejected by the impugned order.
The argument of Sri Paliwal is that the provision of appeal namely, Section 35F of the Central Excise Act, 1944 (for short the "Act") was amended by Finance Act No. 2 of 2014 with effect from 6.8.2014. It provided deposit of only 7.5% of the disputed amount as a condition precedent for entertaining the appeal. Therefore, the application of the petitioner to waive the pre-condition of depositing the entire disputed amount was wrongly rejected by the Tribunal.
In view of the submission made above, the following question of law arises for consideration :-
"Whether the CESTAT is justified in rejecting the stay/waiver application of the appellant to waive the condition of pre-deposit of the entire disputed amount of the duty for entertaining the appeal under Section 35F of the Act ?"
In response to the above argument and the question, Sri Parv Agarwal submits that the amended provisions of Section 35F of the Act are not applicable to the appeals, which were filed before the enforcement of the amended provisions and therefore, there is no error on the part of the Tribunal in passing the impugned order.
There is no dispute to the fact that under the order in original or the order in appeal, the appellant was saddled with the liability to pay a sum of Rs.10,96,452/- with an equal amount of penalty as well as interest. The appellant filed the appeal on 09.01.2014 but had not deposited any part of the disputed amount.
Section 35F of the Central Excise Act, 1944 as it stood on the date of filing of appeal read as under :-
"SECTION 35F. 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, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied :
Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.
Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.
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 57CC of Central Excise Rules, 1944;
(iv) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004;
(v) interest payable under the provisions of this Act or the rules made thereunder."
A simple reading of the aforesaid provision reveals that the person desirous of appealing against any order of the authority below shall pending the appeal deposit with the Adjudicating Authority the duty demanded or the penalty levied. The Appellate Tribunal has been vested with the power to dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard interest of the revenue.
In other words, deposit of the duty demanded under the impugned order or the penalty levied is a condition precedent for adjudicating the appeal but the said condition in a given case may be waived by the Appellate Tribunal.
The above Section 35F of the Act was drastically amended by Act No.2 of 2014 enforced with effect from 6.8.2014 and it provides as under :-
"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-
(1) 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 that 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 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 deposit ten per cent, of the duty, in case where duty or duty and penalty are 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 Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004;"
The amended provision lays down that an appeal shall only be entertained if 7.5% of the duty or the penalty is deposited, provided the amount required to be so deposited does not exceed rupees ten crores. It further provides that the above provisions shall not apply to the stay application and appeal pending before any Appellate Authority prior to the commencement of the Finance Act No.2 of 2014 i.e. 6.8.2014.
The second proviso to Section 35F of the Act, as amended, is very clear and it specifically excludes the appeals already filed and pending before the Appellate Authority from the applicability of the amended provisions of Section 35F of the Act.
In view of the second proviso to the Section 35F of the Act would not apply to appeals which were filed prior to the enforcement of the amending Act and were pending on the date of its enforcement.
A Division Bench of the Rajasthan High Court in the case of Rajasthan State Industrial Development and Investment Corporation Ltd. Vs. Union of India and others, decided on 12.2.2015 placing reliance upon its earlier decision in the case of Paramount Security Vs. Union of India and others (Civil Misc. Writ Petition No.12232 of 2014, DB) held that the effect of the amendment to Section 35F of the Act cannot be restricted only to those appeals which are filed after 6.8.2014. It therefore held that the amended provisions of Section 35F of the Act would apply even to appeals filed prior to the above date otherwise it would result in discrimination.
On the contrary, a Division Bench of Allahabad High Court vide its judgment and order dated 14.5.2015 passed in Central Excise Appeal No.102 of 2015 (M/s. Jaiswal Industries Vs. The Commissioner of Central Excise) considering the above decision of the Rajasthan High Court held that from a simple reading of the amended Section 35F of the Act, it is clear that the amended provisions will have no application to the appeals which were filed and were pending before the Tribunal prior to the enforcement of the amendment.
The Division Bench further went on to observe that the law is settled that if the language of the Statute is simple and admits of only one meaning than no rule of interpretation is to be applied and the simple and literal meaning has to be given effect to. It was observed that the proposition as laid in the said judgment is not such to compel the court to agree with it and thus, the decision of the Rajasthan High Court was not followed.
In view of the above decision of Allahabad High Court, we are left with no option but to follow the same specially when the language of Section 35F of the Act as amended is clear & unambiguous and leaves no room but to hold that the amended provisions would not apply to the appeals pending before the enforcement of the aforesaid amendment.
In the case at hand, as stated earlier, there is no dispute to the fact that the appeal before the Tribunal was filed on 9.1.2014 much before Section 35F of the Act was amended and enforced. Therefore, the appeal filed by the appellant is to be governed by the un-amended provisions of Section 35F of the Act, which provides for the deposit of the entire disputed amount. Since the petitioner has not deposited the same, his appeal could not be heard on merits.
This apart, the Tribunal has observed that no case for any ground of stay/waiver of the deposit of the disputed amount is made out as the Revenue has a strong prima facie case in his favour meaning thereby that the chances of the success of the appellant in appeal are weak.
In the aforesaid facts and circumstances, the question of law is answered in favour of the Revenue and against the assessee holding that the amended provisions of Section 35F of the Act are not applicable to the appeals filed prior to the date of enforcement of the amended provisions i.e. 6.8.2014.
The appeal therefore has no merit and is dismissed.
Order Date :- 29.8.2017 V Kumar