By TIOL News Service

MUMBAI, JUNE 11, 2015: IN the present case the SCN was issued on 22.06.2010 and the adjudicating authority viz. CCE, Belapur passed an O-in-O on 16.12.2014.

Against this order, the appellants have filed appeals before the CESTAT but without making any pre-deposit and, therefore, the appeals were heard by the Bench to decide on the aspect of maintainability.

The appellant submitted that as the SCN was issued on 22.06.2010 pertaining to period earlier to that, the provisions of substituted (w.e.f 06.08.2014) s.35F of CEA, 1994 would not be applicable. They rely on a host of case laws viz. K. Rama Mohana Rao & Co. - 2015-TIOL-511-HC-AP-CX, A.M. Motors - 2015-TIOL-1069-HC-KERALA-ST, Hossein Kasam Dada (India) Ltd. - 2002-TIOL-363-SC-CT; Godrej Industries Ltd. - 2014-TIOL-1760-HC-MUM-CX in support of their stand.

The AR submitted that none of the judgments have examined and decided the issue; that the second proviso to amended Section 35F very clearly states 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 FA, 2014 and, therefore, the said proviso indicates that the amended provisions are retrospective in nature and will be applicable to all the stay applications and appeals filed after the date of coming into force of the said provisions; that the period of dispute, date of issuing the order-in-original/order-in-appeal or show cause notice are not relevant. Reliance is also placed on the decision in Shridhar Metal - 2015-TIOL-654-CESTAT-MUM to submit that the Bench had analysed the issue in detail and come to the conclusion that the new provisions shall be applicable in respect of all the appeals filed after the enactment of the said provisions. It was also submitted that even in the old Section, the appellants had no right to force the Tribunal to hear the appeal without pre-deposit of the duty demanded and penalties imposed and 'that it was only a discretionary power by which the Tribunal could waive such a requirement in part or full. Inasmuch as since the appellants have not made the mandatory pre-deposit, their appeals are liable to be dismissed.

The Bench extracted the provisions of s.35F of the CEA, 1944 as they existed prior to substitution on 06.08.2014 by the FA, 2014, the objectives as given in the Explanatory Notes on the Finance Bill, 2014 regarding amendment of Section 35F; J.S/TRUletter DOF No. 334/15/2014-TRU dated 10.7.2014, Board Circular No. 984/08/2014-CX dated 16.9.2014; extracts from paragraph 10 of apex court decision in Hossein Kasam Dada (India) Ltd. and inter alia observed -

++ A perusal of the above would indicate that even before the amendment in August 2014, under the old Section, the person desirous of appealing against any decision or order shall, pending the appeal, deposit with the adjudicating authority, the duty demanded or the penalty levied. Thus, the right of appeal was subject to the appellant depositing the duty demanded or penalty levied. However, the first proviso to the said Section provided that where in any particular case, the Tribunal is of the opinion that the deposit of the duty demanded or penalty levied would cause undue hardship to such person, the Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interests of revenue. Thus, only in the cases where the Tribunal was of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship, the Tribunal had discretionary power to dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interests of revenue.

++ It would be seen that the Hon'ble Supreme Court has taken the view that the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. In the case before hand, as observed earlier, even in the earlier provisions the right of appeal was subject to deposit of the entire amount of duty and penalty while in the new provisions it is subject to deposit of 7.5% of the duty or penalty. Thus, the amended provisions are in fact more favourable to the appellant-assessees. Further, all that has been done is to take away the discretionary power of the tribunal to waive the requirement of deposit in cases where the Tribunal is of the view that the deposit of duty or penalty would cause undue hardship. Even in such cases, the Tribunal was required to put such conditions as it may deem fit so as to safeguard the interest of revenue. The said discretionary power was taken away. We are in total agreement with the submission of the learned AR that the second proviso makes it very clear that the amended provisions would not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014 which in turn would imply that in respect of the stay applications and appeals filed before any appellate authority after the commencement of the Finance (No. 2) Act, 2014 the new provisions will apply irrespective of the date when the order-in-original/order-in-appeal or the show cause notice was issued or the period of dispute.

The decisions cited by the appellant were distinguished and the Bench concluded thus -

"…the second proviso to amended Section 35F makes it very clear that the pending stay applications and appeals as on the date of commencement of the Finance (No.2) Act, 2014 will be governed by the old Section 35F and by implication, the substituted Section 35F will be applicable to all the appeals filed after the commencement of the Finance (No.2) Act, 2014."

Holding that the appeals filed are not maintainable, the same were dismissed.

In passing: Please also see 2015-TIOL-576-CESTAT-KOL. By the way, making pre-deposit and filing application for restoration - Possible? Please see 2015-TIOL-658-CESTAT-MUM.

(See 2015-TIOL-1093-CESTAT-MUM )