Tribunal lacks power to waive pre-deposit despite strong case - applicants must comply with deposit rule.

The Tribunal held that it does not have inherent power to grant interim protection against the mandatory pre-deposit condition under Section 35F of the Central Excise Act. Despite recognizing the strong prima facie case for waiver of pre-deposit by the applicants, the Tribunal emphasized the legislative mandate requiring the deposit for the appeal to be entertained. The majority decision directed the applicants to make the mandatory pre-deposit within four weeks to proceed with their appeals.

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Issues Involved:
1. Whether the Tribunal has inherent power to grant interim protection against the mandatory pre-deposit condition under Section 35F of the Central Excise Act, 1944.
2. Whether the applicants have a prima facie case for waiver of pre-deposit.

Issue-wise Detailed Analysis:

Issue No. 1: Inherent Power to Grant Interim Protection

The Tribunal examined whether it has the inherent power to grant interim protection against the mandatory pre-deposit condition under the amended Section 35F of the Central Excise Act, 1944. The applicants argued that the Tribunal should have such power, citing the Punjab State Power Corporation case under the Punjab VAT Act, which has similar pre-deposit provisions. However, the Tribunal noted significant differences between the Central Excise Act and the Punjab VAT Act, including the graded scheme of pre-deposit and the cap on the amount required to be deposited under the Central Excise Act.

The Tribunal also considered the interim order of the Punjab & Haryana High Court in the Super Threading India Pvt. Ltd. case, which granted interim relief from the pre-deposit condition. However, it was determined that this interim order was not a binding precedent as it was not a final judgment and was disposed of as infructuous.

The Tribunal concluded that it does not have inherent power to grant interim protection against the mandatory pre-deposit condition, as the amended Section 35F explicitly requires such a deposit for the appeal to be entertained. The Tribunal emphasized that it must follow the legislative mandate, which leaves no room for exceptions.

Issue No. 2: Prima Facie Case for Waiver of Pre-deposit

The applicants argued that they had a strong prima facie case for waiver of pre-deposit, citing a previous Tribunal decision in their favor regarding their Karnal unit. The Tribunal had previously held that the process of converting paddy into rice does not amount to manufacture, and thus, the goods were not excisable.

The respondents, however, contended that the applicants were required to make the mandatory pre-deposit as per the amended Section 35F, regardless of their prima facie case. They cited various High Court decisions, including those of the Allahabad, Delhi, and Bombay High Courts, which upheld the applicability of the amended Section 35F to appeals filed after 6-8-2014, even if the show cause notice was issued before that date.

The Tribunal acknowledged the applicants' strong prima facie case but reiterated that the mandatory pre-deposit requirement under the amended Section 35F must be adhered to. It concluded that the applicants are required to make the pre-deposit to proceed with their appeals.

Separate Judgments:

Member (Judicial): Ashok Jindal opined that the Tribunal has inherent power to grant interim protection and that the applicants had a prima facie case for waiver of pre-deposit. He relied on the Punjab State Power Corporation case and the interim order in the Super Threading India Pvt. Ltd. case.

Member (Technical): Devender Singh disagreed, stating that the Tribunal does not have inherent power to grant interim protection against the mandatory pre-deposit condition. He emphasized that the amended Section 35F is clear and must be followed. He also noted that the interim order in the Super Threading India Pvt. Ltd. case is not a binding precedent.

Third Member on Reference: Archana Wadhwa agreed with the Member (Technical), concluding that the Tribunal does not have inherent power to grant interim protection and that the applicants must comply with the mandatory pre-deposit requirement under the amended Section 35F.

Final Order:
In view of the majority decision, the applicants were directed to make the mandatory pre-deposit within four weeks and report compliance.

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