CX - s.35F - In appeal procedure in Tribunal, stage of entertaining appeal is right from date of filing of appeal, therefore, at time of filing of appeal, appellant is required to make deposit of 7.5% or 10%of duty: CESTAT
By TIOL News Service
MUMBAI, APR 12, 2015: SECTION 35F of the CEA, 1944 was substituted by the Finance Act, 2014 w.e.f 06.08.2014.
Extract of the same reads -
Section 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.
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The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal -
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(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 Commissioner of Central Excise;
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(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;
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(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:
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Provided that the amount required to be deposited under this section shall not exceed rupees ten crores:
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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.
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The CESTAT had vide Circular dated 14 th October, 2014 inter alia clarified thus -
2. The above said provisions came into force with effect from 06.08.2014. However, some of the appellants/ consultants/ Counsels while presenting appeals are expressing reluctance in compliance with the condition of mandatory deposit stipulated under the Act as amended. Some of them have contend that as the Show Cause Notice was issued and demand confirmed earlier to 06.08.2014, the amended provisions are not applicable to their case. Few of them have relied upon judgments of various judicial forums to claim exemption from the mandatory deposit while filing appeal. It is pertinent to mention that no such 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.
3. In view of above, DRs/ARs/TOs of all Benches are directed that if no evidence in support of mandatory deposit is produced while filing appeal, such appeals, after providing three opportunities/reminders, be numbered and listed on Fridays before the Court presided by the Senior Member, for appropriate orders.
Incidentally, in the present set of appeals, the appellant did not make the requisite pre-deposit of 7.5% of the duty in terms of Section 35F of CEA, 1944 and, therefore, the appeals were listed for maintainability.
The appellant made the following submissions before the Bench -
++ as per the provision (s.35F),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.
++ 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 view of 35B(i)d 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%.
++ Dictionary meaning of ‘entertain' means ‘to give judicial consideration' and it also means ‘to admit a thing for consideration'.
++ In view of judgments 1968 AIR 488 SCR (1) 505] Lakshmi Rattan Engineering Works Ltd. vs. Asstt. Commr. Sales Tax, Kanpur & Anr.; [AIR 1963 All 320] Haji Rahim Bux and Sons and Ors. Vs. Firm Samiullah and Sons [AIR 1963 ALL 547] Kundan Lal vs. Jagan Nath Sharma;[AIR 1991 Ker 253] Nanu Vasudevan vs. Kalikarthiayaniamma And Anr., the provision of Section 35F 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;
++ that 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 cannot be insisted upon to deposit the said amount of pre-deposit .
The AR referred to the CESTAT Circular F. No. 15/CESTAT/General/2013-14 dated 14/10/2014 and the CBEC Circular 984/08/2014-CX dated 16/9/2014 and submitted 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.
The Division Bench after considering the submissions and extracting the provisions of section 35F of the CEA, 1944 observed thus -
++ In view of the section 35F, 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 that the appeal cannot 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 Hon'ble High Court and Hon'ble 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 of 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 cannot be interpreted that as per the amended Section 35F 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 35F 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.
After referring to the Board Circular dated 16/9/2014 and extracting the Ministry's J.S/TRU letter D.C.F. No. 334/15/2014-TRU dated 10/7/2014, the Bench further observed -
"From the above TRU's letter, it becomes clear that the intention of the legislature is that the deposit of 7.5% of 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 provisions which is under interpretation…."
Reliance was also placed inter alia on the decision in Connaught Plaza Restaurant (P) Ltd. - 2012-TIOL-114-SC-CX and it was observed -
"…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, TRU's 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."
So, the CESTAT directed the appellant to deposit 7.5% of the duty within a period of four weeks and report compliance.
In passing : Also see Bhatia Global Trading Co. - 2015-TIOL-658-CESTAT-MUM
(See 2015-TIOL-654-CESTAT-MUM)
