TaxTMI 
TaxTMI 
2017 (12) TMI 1673
X X X X Extracts X X X X
X X X X Extracts X X X X
....Various show cause notices were issued to the applicants for the period May, 2010 to July, 2014 on the ground that the applicants have disclosed in monthly ER-2 returns filed with the department the DTA clearances of broken rice, rice bran an basmati rice without payment of duty which was required to be paid in terms of section 3(1) of the Central Excise Act, 1944 read with section 12 of the Customs Act, 1962, therefore, it was alleged that the appellant has made DTA clearances of broken rice, rice bran an basmati rice without payment of duty which was required to be paid in terms of section 3(1) of the Central Excise Act, 1944 read with section 12 of the Customs Act, 1962 with effect from the date of bonding. The show cause notices were adjudicated and the demand of duty was confirmed against the applicants alongwith interest and various penalties were also imposed. Aggrieved from the said orders, the applicants have filed the appeals alongwith stay applications for waiver of pre-deposit for entertaining the appeals filed before this Tribunal. 3. Learned Senior Standing Counsel for the respondent raised objection that the applications for pre-deposit are not maintainable as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case, section 35F of the Central Excise Act is under consideration. He also relied on the CBEC Circular No;984/8/2014-Cx dated 16.9.2014. 5. On merits, he submits that in the applicant's own case in their Karnal unit although there is decision of this Tribunal, the issue in both cases is not identical. Further, the department is in process of filing SLP before the Hon'ble Supreme Court against the order of this Tribunal and the order of this Tribunal has been passed on wrong premise that rice is not a manufacturing commodity. Moreover, the Apex Court in the case of Ganesh Trading AIR 1974 SC 1362 has held paddy when converted into rice is a manufactured item. Further, rice and paddy are also commonly known to be two different an distinct commodities. Therefore, the rice is a manufactured item that discontinues to remain in its natural form. In that circumstance, he submits that the applicants are required to make pre-deposit as per section 35F of the Act. He further submits that as there is no doubt about the exisability of the said goods which emerged as result of manufacture, therefore, the department is having strong case. He also relied on the decision of the Apex Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l in similar matter, has taken a baseless plea that as the case of Super Threading (India) Pvt. Ltd. has been disposed of on 13.8.2015 as infructuous, the same ought not be relied upon. 8. It is his contention that this Tribunal has decided the application for stay of pre-deposit on 11.8.2015, there exist nothing further to decide in the writ petition filed by Super Threading (India) Pvt. Ltd. Therefore, the writ petition was disposed off. The order dated 13.8.2015 does not recall or set aside or modify the earlier order dated 24.4.2015. It goes without saying that the Hon'ble High Court was also pleased to grant liberty to the petitioner therein to challenge the order dated 11.8.2015 passed by this Tribunal. The said writ petition was disposed of by the Hon'ble High Court on the ground that requisite relief has already been granted, therefore, the petition has become infructuous, the same does not render the earlier direction of the Hon'ble High Court is not effective or not binding. Therefore, the binding nature of the order dated 24.4.2015 remain unaffected in any way. 9. He further submits that this Tribunal is having inherent power to adjudicate the stay appl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g inherent power to grant interim protection against imposition of such condition for hearing the appeal on merits or not? 14. It is also the contention of the learned Counsel for the respondent that interim order in the case of Super Threading (India) Pvt. Ltd. is not applicable as the writ petition has been disposed of by the Hon'ble High Court as infructuous. In fact, in the said case, initially the Hon'ble High Court has granted interim relief to the petitioner with a direction to file an application for waiver of pre-deposit before this Tribunal and on the direction of the Hon'ble High Court, this Tribunal had entertained the stay application filed by the petitioner, which was disposed of by this Tribunal. After disposing off the stay application by this Tribunal, the Hon'ble High Court found that nothing survive in the writ petition filed by the petitioner before the Hon'ble High Court, the petition was disposed of as infructuous. In that circumstance, as interim order has been complied with by this Tribunal, therefore, it cannot be said that the interim order passed in the writ petition by the Hon'ble High Court in the case of Super Threading (Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M.K. Mohamad Kunhi, MANI/SC/0087/1968 : AIR 1969 SC 430, wherein the question was whether the Income Tax Appellate Tribunal had the power under the relevant provisions of the Income Tax Act, 1961 to stay recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. After considering the matter, the Apex Court held that the Appellate Tribunal has power to grant stay as incidental or ancillary to its appellate jurisdiction subject to there being a strong prima facie case and satisfaction that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. The relevant observations read as under:-- "4. There can be no manner of doubt that by the provisions of the Act or the Income-tax Appellate Tribunal Rules, 1963 powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee. At the same time it is significant that under s.220(6) the power of stay by treating the assessee as not being in default during the pendency ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authorities to make such orders as they choose to pass in exercise of unfettered discretion. The assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before, has no right to even move an application when an appeal is pending before the Appellate Tribunal under Section 220(6) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statue provides for such a matter being dealt with by the Income tax Officer. It is a firmly established rue that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Sutherland Statutory Construction, Third Edition, Art. 5401 and 5402). The powers which have been conferred by section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers, fully effective. In Domat's Civil Law Cushing's Edition, Vol.1 at page 88, it has been stated: "It is the duty of the Judges to apply the laws, not only to what appears to be re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the above observations, the Hon'ble High Court examined the issue of inherent power of the appellate authority to grant interim protection against imposition of such condition and held the first appellate authority is having power to grant interim protection. 18. As the Hon'ble High Court has examined the issue under Punjab VAT Act, 2005, therefore, it is required to see whether the provisions of Punjab VAT Act, 2005 and Central Excise Act, 1944 are pari materia or not: the same are reproduced as under: Punjab Vat Act 2005 Central Excise Act, 1944 Section 62- First appeal (1) An appeal against every original order passed under this Act or the rules made thereunder shall lie, - (a) If the order is made by a Excise and Taxation Officer or by an officer incharge of the information collection centre or check post or any other officer below the rank of Deputy Excise and Taxation Commissioner; or (b) if the order is made by the Deputy Excise and Taxation Commissioner, to the Commissioner; or (c) if the order is made by the Commissioner or any officer exercising the powers of the Commissioner, to the Tribunal (2) An order passed in appeal by a Deputy Exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent, of the duty, in case where duty or duty and penalty are in dispute, or in penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores; Provided further 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 Finance (No.2) Act, 2014. Explanation. - For the purposes of this section "duty demanded shall include, - (i) amount determined under section 11D; (ii) amount of Erroneous Cenvat credit taken; (iii) amount payable under Rule 6 of the Cenvat Credit Rules, 2001 the Cenvat Credit Rule, 2002 or the Cenvat Credit Rules, 2004. 19. From the above, we find that the provisions of Rule 62(5) of Punjab VAT Act, 2005, and Section 35(F) of Central Excise Act, 1944 are pari materia and the Hon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;s own case for Karnal unit, this Tribunal has observed that de-husking paddy into rice is not an activity of manufacture relying on the decision of the Apex Court in the Cynamid India Ltd. (supra) wherein the Hon'ble Apex Court has held that conversion of paddy into rice is not distinct operation as paddy and rice remains in their natural form even after dehusking and are covered by terms "agricultural products." We also find that the decision of this tribunal in the applicant's own case for Karnal unit has not been stayed by any higher forum. The case law relied by the Ide Counsel for the respondent are applicable to the facts of the case in hand. Therefore, relying on the decision of this Tribunal in the applicant's own case for Karnal unit, the applicant has made out prima facie a case for waiver of pre-deposit. 25. In view of the above, the issue no.2 is also answered in favour of the applicant. 26. In the circumstances, we waive the requirement of pre-deposit of entire amount of duty, interest and penalties and stay recovery thereof during pendency of the appeals. Therefore, the balance of convenience lies in favour of the applicants and if the applicants ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der consideration i.e. whether the amended Section 35F of Central Excise Act, 1944 would apply to the appeals filed after 06.08.2014 wherein the show cause notice was issued before 06.08.2014. In the case of M/s Dream Castle Vs. UOI - 2016 (43) STR 25 (Mad.), Nimbus Communication Ltd. Vs. Commissioner of Service Tax, Mumbai-IV - 2016 (44) STR 578 (Bom.), Ganesh Yadav Vs. UOI - 2015 (320) ELT 711 (All) and Pioneer Corporation Vs. UOI - 2016 (340) ELT 63 (Delhi), the Hon'ble High Courts have answered the question affirmatively. 31.1 In the case of M/s Dream Castle Vs. UOI (supra), the Hon'ble Madras High Court held as under:- "76. We do not know how the above passage goes to the rescue of the assessees. The argument of the assessees in the cases on hand is that the amendment would apply only to the proceedings that commence with the issue of show cause notices on or after 6-8-2014. In other words, the contention of the writ petitioner before us is that if a show cause notice had been issued on 5-8-2014, the amended provisions will not apply to an order-in-original passed in pursuance of the same, even if such an order is passed after 6-8-2014. The above Circular does no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecific stipulation and the extent to which the interest of the Revenue has to be secured is also clarified. Once there is a clear indication from the language of the Statute and which is plain and unambiguous, then, we do not think that the view taken by the Kerala High Court can be accepted. We would prefer to agree with the Hon'ble Division Bench of the Allahabad High Court in Ganesh Yadav (supra). This is not a case where the principle in Garikapatti Veeraya (supra) relied upon by Mr. Dada can be applied and for the reasons which have been assigned by the Allahabad High Court. 22. The view taken by the Division Bench of the High Court of Madras in Dream Castle (supra), with respect, is also in consonance with the statutory prescription and the intent. It has referred to all the decisions in the field and the rival contentions. The Division Bench of the Allahabad High Court and all other judgments, including of the Kerala High Court have been extensively referred to. The independent reasoning of the Division Bench of the High Court of Madras is, with respect, rightly construing and interpreting the statutory provision. As held by the Division Bench of the High Court of Mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e provisions of Section 35F of the Central Excise Act, 1944 by Finance Act (No.2) of 2014, has laid down that the Tribunal or the Commissioner (Appeals) "shall not entertain any appeal" unless the appellant has deposited the duty or, as the case may be, a penalty to the stipulated extent. These words in Section 35F of the Act would indicate that on and after the enforcement of the provision of Section 35F of the Act, as amended, an appellant has to deposit the duty and penalty as stipulated and unless the appellant were to do so, the Tribunal shall not entertain any appeal. This provision would, therefore, indicate that it would apply to all appeals which would be filed on and from the date of the enforcement of Section 35F of the Act. 20. The intendment of Section 35F of the Act is further clarified by the second proviso which stipulates that the provisions of the section shall not apply to stay applications and appeals which were pending before any appellate authority prior to the commencement of Finance (No.2) Act, 2014. The second proviso is a clear indicator that Parliament has exempted the requirement of complying with the pre-deposit as mandated by Section 35F(1) of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... have been initiated prior to enactment of amended Section 35F. 32. Another plea raised by the appellant is that the Tribunal has inherent power to adjudicate the stay applications and pass orders of interim protection to the assessee de-hors the condition of mandatory pre-deposit. They have relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of Punjab State Power Corporation Limited (supra) and argued that the provisions of Punjab Vat Act, 2005 are pari materia to the Central Excise Act. Mandatory pre-deposit provisions in the VAT provisions in the Punjab VAT Act are similar to the Central Excise Act, 1944. 33. I find that though both Punjab VAT Act and the Central Excise Act are fiscal statutes, the object, incidence of tax/duty and scheme of law are different in the two Acts. Punjab VAT Act imposes taxes on sale of the goods whereas in the Central Excise Act, the duty is levied on the manufacture of the goods, but the payment of the same is deferred to the point of removal of the goods from the factory. 34. Although it is sought to be contended that the mandatory pre-deposit provisions are pari materia in the Central Excise Act and Punjab Vat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nded Section 35F has been upheld by me in the instant matter, the question for consideration of waiver of pre-deposit under pre-amended Section 35F is thus redundant. Hence, I am not giving any findings on the same. Sd/- Devender Singh Member (Technical) POINTS OF DIFFERENCE 39. As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the following issues :- (a) Whether interim order passed by the Hon'ble High Court of Punjab & Haryana in the case of Super Threading Pvt. Limited in CWP No.7696 of 2015 is a binding precedent applicable to the facts of this case or not. (b) Whether the judgements of four different High Courts and of Division Bench of this Tribunal precisely on the very same issue under consideration, under Central Excise Act, 1944 are applicable to the case; or (c) Whether this Tribunal is having inherent powers to grant interim protection of such condition of mandatory pre-deposit for hearing the appeals, in the light of the decision of Hon'ble High Court of Punjab & Haryana under Punjab VAT Act, in the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision or an order passed by an officer of Central Excise lower in rank than the Principal Commissioner Central Excise or Commissioner of Central Excise; (ii) against the decision or order referred to in clause (a) of sub-section (1) of Section 35B, unless the appellant has deposited seven and a half per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of Section 35B, unless the appellant has deposited ten per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against : PROVIDED that the amount required to be deposited under this section shall not exceed rupees ten crores : PROVIDED FURTHER 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 Finance (No. 2) Act, 2014. Explanation : For the purposes of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n any appeal, without pre-deposit, even in deserving cases. The said section makes no exception for dispensation from pre-deposit in a given circumstance. As such, though I feel that the appellant should be granted dispensation from the pre-deposit but in the absence of any powers or jurisdiction to do so, I feel handicapped. 44. On going through the orders by both the Learned Members, I note that Learned Member (Judicial) has relied upon the interim order of Punjab & Haryana High Court in the case of Super Threading India Pvt. Ltd. v. Union of India and Learned Member (Technical) referred to the Hon'ble Supreme Court decision in the case of Amresh Tiwari v. Lalta Prasad Dubey & Another (2000) 4 SCC 440 clarifying that such interim orders cannot be held to be of any binding precedent inasmuch as, the law stands clarified by the Hon'ble Supreme Court, I agree with the Learned Member (Technical) that such interim orders will not carry any precedent value. 45. Further, the Learned Member (Judicial) has relied upon the Punjab and Haryana decision in the case of Punjab State Power Corporation. As rightly pointed out by Learned Member (Technical), the said decision was in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders on the same. 47. Before I conclude, it may be observed that in my personal views, the amended provisions of Section 35F are rigid and inflexible and do not grant any scope of exigencies. In a situation, like the present case, where an assessee has already procured a successful order from the Tribunal on the disputed issue, the condition of pre-deposit, in terms of the provisions of amended Section 35F would be an unjustified condition, apart from the fact that the same would lead to multiplication of litigants. The appellant is likely to succeed in the present appeals also, in view of the earlier order of the Tribunal, thus leading to further litigation for refund of the amounts so deposited. It is a matter of experience that to save limitation Revenue keeps on issuing repeated show-cause notices on the same issue. The first notice, after due adjudication reaches the higher forum and if the dispute gets settled in favour of the assessee, the adjudications in the pipe-line would also be required to set aside. In such a situation, directing the assessee to make pre-deposits would neither be just nor fair inasmuch as after pre-deposit, his appeals are more than likely to ....