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2025 (5) TMI 1452 - HC - Central ExciseNonfulfillment of mandatory requirement of pre-deposit - affidavit for poor financial condition - waive the pre-deposit or to reduce the pre-deposit - Seeking direction to entertain the appeal filed under Section 35B of the Central Excise Act 1944 - exercise of power under Article 226 of the Constitution of India - HELD THAT - In Rahul Rajvaidhya v/s Customs Central Excise and Service Tax the Division Bench 2019 (10) TMI 227 - MADHYA PRADESH HIGH COURT has dismissed the appeal affirming the order of the Tribunal due to nonfulfillment of mandatory requirement of pre-deposit as provided under Section 129(e) of the Central Excise Act. In case of M/s Shree Marwal Sewashram v/s Customs Excise Service Tax Appellate Tribunal 2018 (3) TMI 1427 - MADHYA PRADESH HIGH COURT the writ petition has been dismissed be declining the relaxation of pre-deposit which is mandatory under Section 35(f) of the Act 1944 and the order of dismissal of appeal by the Central Excise Service Tax Appellate Tribunal has been affirmed. In view of the above the Tribunal has not committed any error while dismissing the appeal due to non-deposit of the statutory amount as per provisions of Section 35(f) of the Act 1944. Accordingly this Writ Petition is dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal question considered by the Court is whether the mandatory condition of pre-deposit of the statutory amount under Section 35B of the Central Excise Act, 1944, can be waived or relaxed by the Court in exercise of its jurisdiction under Article 226 of the Constitution of India. Specifically, the Court examined if the petitioners could be excused from depositing the entire statutory amount prior to the admission of their appeal against the order demanding excise duty, interest, and penalties. 2. ISSUE-WISE DETAILED ANALYSIS Issue: Whether the pre-deposit condition under Section 35B of the Central Excise Act, 1944, is mandatory and if the Court can relax this condition under its writ jurisdiction. Relevant legal framework and precedents: Section 35B of the Central Excise Act, 1944, mandates the deposit of the amount specified by the authorities before an appeal is entertained. The Court referred to several precedents that have consistently held the pre-deposit condition to be mandatory and not subject to relaxation. These include decisions by various High Courts and the Appellate Tribunal, such as OTA No.4/2019, M/s Shree Marwal Sewashram v/s Customs, Excise & Service Tax, Ankit Mehta v/s Commissioner, and decisions of the Delhi High Court in Pioneer Corporation and Anjani Technoplast Ltd. The Supreme Court's ruling in Chandra Sekhar Jha v/s Union of India was pivotal, clarifying the legislative intent behind the pre-deposit provisions and the limits of judicial discretion in this regard. Court's interpretation and reasoning: The Court observed that the pre-deposit condition is a statutory mandate designed to ensure compliance and deter frivolous appeals. The Court emphasized that the power under Article 226 of the Constitution to issue writs cannot be exercised to override or dilute a clear statutory requirement. The Court noted that the legislative amendments to Section 129-E (analogous to Section 35B) reflect a deliberate intent to limit the amount required for pre-deposit and to restrict judicial interference in this process. Key evidence and findings: The petitioners failed to deposit the statutory amount before filing the appeal, leading to dismissal of their appeal by the appellate authority. The petitioners contended financial hardship, supported by affidavits indicating poor financial condition during 2016-17 and 2020-21. However, the Court found that financial difficulties do not constitute sufficient grounds for waiver of the statutory pre-deposit requirement. Application of law to facts: Applying the statutory provisions and judicial precedents to the facts, the Court found no justification to relax the mandatory pre-deposit condition. The petitioners' failure to comply with the statutory mandate resulted in the lawful dismissal of their appeal. The Court held that allowing relaxation would contravene the explicit legislative intent and established judicial interpretation. Treatment of competing arguments: The petitioners argued for waiver of the pre-deposit condition on grounds of financial hardship and the interest of justice. The Court acknowledged these arguments but distinguished them from the legal mandate, underscoring that the statutory provisions do not provide discretion to waive the pre-deposit. The Court also addressed the petitioners' reliance on the timing of the triggering incident (2013) vis-`a-vis the amendment of Section 129-E, rejecting the argument that they should benefit from pre-amendment provisions. The Court explained that the substitution of the provision repealed the earlier law and that the appeal filed post-amendment must comply with the amended statutory requirements. Conclusions: The Court concluded that the pre-deposit condition under Section 35B of the Central Excise Act, 1944, is mandatory and cannot be waived or relaxed by the Court under Article 226. The appeal was rightly dismissed for non-compliance with the pre-deposit requirement. Consequently, the writ petition seeking waiver was dismissed. 3. SIGNIFICANT HOLDINGS The Court articulated the following crucial legal reasoning: "The pre-deposit condition is a mandatory statutory requirement under Section 35B of the Central Excise Act, 1944, and cannot be waived or relaxed by the Court in exercise of its writ jurisdiction under Article 226 of the Constitution." "The legislative intention behind the substitution of Section 129-E is to limit judicial discretion and ensure that pre-deposit requirements are strictly complied with to prevent frivolous appeals." "Financial hardship or other equitable considerations do not empower the Court to override the clear statutory mandate of pre-deposit before admission of appeals." "The substitution of Section 129-E repealed the earlier provision, and appeals filed after the amendment must comply with the amended statutory requirements." Final determinations:
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