2016 (9) TMI 676 - HC - Central Excise

Court upholds Section 35F Central Excise Act, dismisses writ petitions

The court dismissed the writ petitions, upholding the applicability and constitutional validity of Section 35F of the Central Excise Act. It confirmed ... Waiver of pre-deposit - mandatory pre-deposit - constitutional validity of Sec.35F of the Act - The Tribunal heard the matter and passed an order, holding that Sec.35F would apply to the case of the petitioner irrespective of the fact that the proceedings commenced prior to 06/08/2014, the date on which amendment was brought in force. - Held that:- 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, I do not think that a case has been made out for challenging the constitutional validity of Sec.35F. - 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. - Decided against the appellant. Issues Involved:1. Applicability of Section 35F of the Central Excise Act.2. Constitutional validity of Section 35F.3. Notification No. 24/2014-CE(NT) regarding interest rates.4. Applicability of Section 35F to appeals under Section 85 of the Finance Act.5. Merits of the case.Detailed Analysis:1. Applicability of Section 35F of the Central Excise Act:The petitioner challenged the order by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) which directed compliance with Section 35F of the Central Excise Act. The Tribunal held that Section 35F applies irrespective of whether proceedings commenced before or after 06/08/2014, the date of the amendment. The Tribunal's decision was based on the statutory language which mandates a pre-deposit for appeals filed post-amendment.2. Constitutional Validity of Section 35F:The primary contention was that Section 35F is prospective and should apply only to proceedings initiated after 06/08/2014. The petitioner relied on the Apex Court's judgment in Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Others, which held that the right of appeal is a vested right governed by the law prevailing at the date of the institution of the suit. However, the respondents argued that the vested right of appeal could be taken away by subsequent enactment either expressly or by necessary intendment. The court upheld the constitutional validity of Section 35F, referring to judgments from various High Courts, including Allahabad, Delhi, Gujarat, and Madras, which supported the applicability of Section 35F to appeals filed after 06/08/2014.3. Notification No. 24/2014-CE(NT) Regarding Interest Rates:The petitioners challenged the notification which provided for a 6% interest rate on refunded amounts, whereas a higher interest rate of 35% was applicable if the demand was confirmed. The court did not find it necessary to address the validity of the notification as no cause of action had arisen. The right to challenge the notification was reserved for the petitioners if an occasion arose in the future.4. Applicability of Section 35F to Appeals Under Section 85 of the Finance Act:The petitioners contended that Section 35F should not apply to appeals filed under Section 85 of the Finance Act. The court clarified that Section 83 of the Finance Act makes all provisions of the Central Excise Act applicable to service tax, including Section 35F. Hence, the appellate authority was correct in insisting on the pre-deposit as per Section 35F for appeals under Section 85 of the Finance Act.5. Merits of the Case:The petitioners raised various contentions on the merits of their cases, which the court declined to interfere with, citing the availability of alternate remedies. The court emphasized that the petitioners should pursue the statutory appellate mechanisms provided under the law.Conclusion:The writ petitions were dismissed, upholding the applicability and constitutional validity of Section 35F. The court reserved the right of the petitioners to challenge the interest rate notification at a future date and confirmed the applicability of Section 35F to appeals under Section 85 of the Finance Act.