2019 (8) TMI 1809 - HC - Central Excise

Central Excise Act: Pre-deposit Rule Upheld, Extension Granted for Compliance

M/s. Vish Wind Infrastructure LLP, M/s. J.N. Investment & Trading Co. Pvt. Ltd. Versus Additional Director General (Adjudication), New Delhi

The court upheld the mandatory pre-deposit requirement under the amended Section 35F of the Central Excise Act, 1944 for appeals filed after 6th August ... Maintainability of petition - requirement of deposit of 7.5% of the service tax demand confirmed - Section 35F of Central Excise Act, 1944 - HELD THAT:- It is trite that no court can issue a direction to any authority, to act in violation of the law. A reading of Section 35F of the Central Excise Act reveals, by the usage of the peremptory words “shall not” therein, that there is an absolute bar on the CESTAT entertaining any appeal, under Section 35 of the said Act, unless the appellant has deposited 7.5 % of the duty confirmed against it by the authority below - The two provisos in Section 35F relax the rigour of this command only in two respects, the first being that the amount to be deposited would not exceed ₹ 10 crores, and the second being that the requirement of pre-deposit would not apply to stay applications or appeals pending before any authority before the commencement of the Finance (No.2) Act, 2014, i.e. before 6th August, 2014. Allowing the CESTAT to entertain an appeal, preferred by an assessee after 6th August, 2014, would, therefore, amount to allowing the CESTAT to act in violation, not only of the main body of Section 35F but also of the second proviso thereto, and would reduce the command of the legislature to a dead letter - the prayer of the petitioner for being permitted to prosecute its appeal before the CESTAT without complying with the condition of mandatory pre-deposit, cannot be granted. There is, therefore no substance in these writ petitions which are, consequently, dismissed. Petition dismissed. Issues Involved:1. Validity of the pre-deposit requirement under Section 35F of the Central Excise Act, 1944.2. Applicability of amended Section 35F to appeals filed after 6th August 2014.3. Jurisdiction of the High Court under Article 226 to waive the pre-deposit requirement.Detailed Analysis:1. Validity of the Pre-Deposit Requirement Under Section 35F of the Central Excise Act, 1944:The petitions challenged the order by CESTAT directing the petitioners to deposit 7.5% of the service tax demand. The court examined Section 35F of the Central Excise Act, both pre and post-amendment (effective from 6th August 2014). The pre-amendment Section 35F required full pre-deposit of duty, penalty, and interest, with the possibility of waiver in cases of undue hardship. The amended Section 35F mandates a pre-deposit of 7.5% or 10% of the duty or penalty, capping the amount at Rs. 10 crores, and does not apply to appeals pending before 6th August 2014.2. Applicability of Amended Section 35F to Appeals Filed After 6th August 2014:The court referenced the case of Anjani Technoplast Ltd. v. Commissioner of Customs, which held that the amended Section 35F applies to all appeals filed on or after 6th August 2014, irrespective of when the dispute period or show cause notice occurred. This interpretation was reinforced by decisions from other High Courts, including the Allahabad High Court in Ganesh Yadav v. U.O.I. and the Jharkhand High Court in Sri Satya Nand Jha v. Union of India. The court concluded that the mandatory pre-deposit requirement applies to all appeals filed post-amendment, dismissing the petitioners' argument that the amendment should not apply to their case.3. Jurisdiction of the High Court Under Article 226 to Waive the Pre-Deposit Requirement:The petitioners argued that the High Court, under Article 226, could allow their appeal without the mandatory pre-deposit due to financial hardship. They cited cases like Pioneer Corporation v. Union of India, Shubh Impex v. Union of India, and Manoj Kumar Jha v. DRI, where partial waivers were granted. However, the court noted that these decisions did not consider the precedent set in Anjani Technoplast, which mandates pre-deposit for appeals filed after 6th August 2014. The court emphasized that it could not direct any authority to act in violation of the law, referencing several Supreme Court judgments, including Vice-Chancellor, University of Allahabad v. Dr. Anand Prakash Mishra and A.B. Bhaskara Rao v. C.B.I.Conclusion:The court dismissed the writ petitions, affirming the requirement for mandatory pre-deposit under the amended Section 35F. However, it extended the time for the petitioners to comply with the CESTAT order until 15th November 2019, allowing the appeals to be restored and heard on merit if the deposit is made within the extended timeframe. The related stay applications were also disposed of in light of the main order.