By TIOL News Service

ERNAKULAM, SEPT 15, 2016: THE Petitioners challenge the orders passed by the Tribunal directing them to pre-deposit 7.5% of the duty amount, in spite of the plea that the dispute pertains to the period prior to the amendment of Sec 35 F of the Central Excise Act, 1944.

The contentions raised are two fold. One is that, Section 35F is prospective in operation and it applies only in respect of proceedings which commenced after 06/08/2014. It is contended that the second proviso which indicates that the provisions of the amended section shall not apply to stay petitions and appeals pending before the appellate authority prior to the commencement of Finance Act, 2014 goes contrary to the main provision. Reliance is placed on the judgment of the Apex Court in Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Others - 2002-TIOL-363-SC-CT wherein it is held that the right of appeal is a vested right and such a right accrues to the litigant and exists as on and from the date of the lis commences and that such right is to be governed by the law prevailing at the date of institution of suit or proceeding and not at the date of its decision or filing of appeal.After hearing both sides, the High Court held:

++ there is no doubt about the proposition that appeal is a continuation of the proceedings. But, there are well settled exceptions to general rule. A Statute can take away the said right. The question is whether the said right can be taken away by Section 35F. There is no dispute that Section 35F has come into effect on 06/08/2014. Section 35F imposes a restriction on the Tribunal or the Commissioner (Appeals) to entertain any appeal. The Section starts with the following words: "The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal"

++ therefore, the restriction imposed is on entertaining any appeal. It definitely means that any appeal filed after 06/08/2014 cannot be entertained unless the pre-deposit is made in terms with the Statute. The second proviso is only a clarification which states that the provision will not apply to stay applications and appeals pending before any appellate authority prior to the commencement of the Act. Therefore, when the Statute itself makes it clear that the right of appeal is subject to certain restrictions with effect from a particular date, the general rule that the law relating to appeal which is a vested right that accrues to the litigant as on the date of commencement of lis will not be applicable.

++ furthermore, by virtue of Circular No.984/08/2014-CX dated 16/09/2014, clarification has been issued by the Government of India, Ministry of Finance that the amended provisions apply to appeals filed after 06/08/2014. Sections 35F of the Central Excise Act, 1944 and 129F of the Customs Act, 1962 contain specific saving clause to state that all pending appeals/stay applications filed till the enactment of the Finance Bill shall be governed by the aforesaid provisions. In the said circumstances, no case has been made out for challenging the constitutional validity of Sec.35F. Therefore, the petitioners are liable to deposit 7.5% or 10%, as the case may be, for preferring appeals before the Commissioner (Appeals) or the Tribunal.

(See 2016-TIOL-2107-HC-KERALA-CX)