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2016 (8) TMI 451 - BOMBAY HIGH COURT

2016 (8) TMI 451 - BOMBAY HIGH COURT - 2016 (44) S.T.R. 578 (Bom.) - Section 35F of the Central Excise Act, 1944 pre-deposit - Held 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 .....

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with Mr. Prakash Shah, Mr. Vishal Agarwal, Mr. P.L. Shetty and Ms. Isha Shah for the Appellant. Ms. P.S. Cardozo with Mr. Joel Carlos for the Respondents. ORAL JUDGMENT: [Per S.C. Dharmadhikari, J.] 1. This appeal is against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai, dated 17th December, 2015. 2. The application for stay was dismissed because the appellant failed to comply with the .....

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ply or the amended provisions as on the date of filing of appeal would apply. (2) Whether the second proviso to the amended section 35F can be interpreted as providing expressly or by necessary intendment that amended section 35F would apply to all appeals filed after 6.8.2014, even if the lis in respect of the same has arisen prior to 6.8.2014. (3) Whether the amended section 35F of the Central Excise Act, 1944, w.e.f. 06.08.2014, reduces or puts fetters upon the vested ri .....

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ricket Control in India ( BCCI for short). In terms of this agreement, it was granted a licence of media rights on an exclusive basis in respect of international cricket matches, test matches and one day internationals conducted by the BCCI from 2006 to 2010. The licence authorised the appellant to uplink to the satellite, the live coverage of the match for the purpose of broadcasting it on television and internet. The claim of the appellant is that it sub-licensed its television rights to the e .....

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operty Services. It is claimed that a reply was filed denying these allegations and contending that it was no taxable service. However, the adjudicating authority was not satisfied and on a personal hearing being granted, upheld the demand and imposed equivalent penalty. That order-in-original dated 16th June, 2015, was challenged by way of an appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short CESTAT ). An application was made before the CESTAT and it was .....

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the Tribunal opined that the amended provisions are clear. Once there is a proviso and styled as second proviso to the sub-section of section 35F and so long as that governs and holds the field, it will not be possible to agree with the appellant. Holding thus and following the judgment of the Allahabad High Court in the case of Ganesh Yadav vs. Union of India 2015 (39) Excise Tax Reporter 177, the Tribunal directed compliance with the amended section 35F and failing which it held that the appea .....

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r. Dada submits that there is a vested right of appeal and that cannot be curtailed by a subsequent amendment. He would submit that the Tribunal's view and which is to be found in paragraph 9 of the impugned order is manifestly incorrect inasmuch as it did not appreciate the nature of the right vesting in the appellant before this Court, the impact of the amendment to the law. The right is a package, then, that appellate package could not have been destroyed by relying upon a subsequent prov .....

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s explanatory note. The second proviso to amended section 35F only clarifies what is a obvious position in law. That proviso cannot be read to mean that the amended section 35F would apply to all appeals filed after 6th August, 2014. That is not the intention of the legislature. The proviso only takes care of an ambiguity and present to the mind of the adjudicating authorities. Therefore, that could not have been applied and to refuse the stay application or the prayer of stay in terms of the re .....

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of India, 2015 (320) ELT 711 (All.) 9. On the other hand, Ms. Cardozo appearing on behalf of the Revenue would submit that there is no merit in the appeal. The view taken by the Tribunal is in consonance with the amended section 35F and the second proviso thereto. She would submit that once the legislative intent is apparent and is expressed in plain and unambiguous language, then, there is no scope for any interpretation. This is not a case of right of appeal being curtailed or take .....

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passed by the High Court of Madras in the case of Dream Castle vs. Union of India Writ Petition No. 13431 of 2015 and Writ Appeal No. 1424 of 2015 decided on 18th April, 2016. 10. For properly appreciating the rival contentions, we would make a reference to the power and conferred in the Tribunal vide section 35F as it stood prior to its amendment and post amendment, which read thus : SECTION 35F PRIOR TO AMENDMENT : SECTION 35F: Deposit, pending appeal, of duty .....

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ioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of the revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of .....

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under rule6 of Cenvat Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004; (v) interest payable under the provisions of this Act or the rules made thereunder. SECTION 35F POST AMENDMENT : SECTION 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal. - The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal - (i) under sub-section (1) of section 35, unless .....

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lf 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 a .....

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mount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004. 11. By the unamended provision it is apparent that where in any appeal under the Chapter in which section 35F falls, the decision or order appealed against relates to any duty demanded in respect of the goods which are not under the control of the Central Excise authorities or any penalty le .....

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to impose so as to safeguard the interest of the Revenue. Then, by the second proviso, where an application is filed for dispensing with the deposit of duty demanded or penalty levied, then, the Commissioner (Appeals), wherever it is possible to do so, decide such application within thirty days from its filing. We are not concerned with the further part of section 35F, namely, the explanation. 12. Now, by the amended provision, there is a clear legislative mandate that the appeal sha .....

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ich is postulated by clause (b) of sub-section (1) of section 35B unless the appellant has deposited ten per cent of the duty demanded or penalty imposed in pursuance of the decision or order appealed against. However, the first proviso makes it clear that the amount required to be deposited under this section shall not exceed rupees ten crores and the second proviso is very important for our purpose. It states that the provisions of this section shall not apply to the stay applications and appe .....

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entertain any appeal unless compliance is made of the above condition. 13. Although the second proviso clarifies and amply that the section itself will not apply to the stay application and pending appeals before any appellate authority prior to the commencement of the Finance Act No.2 of 2014, it is urged by Mr. Dada that an appellate package flowing from section 35B cannot be interfered with in such a way so as to nullify the vested right of appeal or to make it illusory.

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udge of the Kerala High Court in the case of Muthoot Finance Ltd. vs. Union of India, 2015 (320) ELT 51. The High Court of Punjab & Haryana did not assign any independent reasons, but following this view of the Kerala High Court, directed that the appeal shall not be treated as not maintainable on account of the failure to deposit the amounts as per amended section 35F. The Court did not explain the ambit and scope of this provision. 15. In Muthoot Finance, the petitioner before t .....

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ection. The argument was that the settled law that the institution of a suit carries with it an implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit and the date of institution of the suit or proceeding would be the governing law to be applicable to the vested right of appeal. The law that prevails at the date of its decision or at the date of filing of the appeal would not be the governing law. The landmark decision in .....

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n. It is no fault of the appellant and that is why the governing law would be the one which was prevailing at the date of commencement of the lis and not the one which was sought to be applied by the Tribunal. 17. This view is consistently taken by the Hon'ble Supreme Court in the case of an appeal guaranteed by section 96 of the Code of Civil Procedure. That is an appeal to challenge an original decree and judgment of the trial court in a suit. As far as that is concerned, the H .....

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ahabad, was sought to be impugned. The argument was that even if the appellate remedy can be resorted to that is rendered illusory by a mandatory requirement of pre deposit of seven and a half per cent and, therefore, a declaration was claimed that such a mandatory prescription is ultra vires or unconstitutional. 19. The Division Bench, speaking through the then Hon'ble Chief Justice Dr. D.Y. Chandrachud, took up for consideration the challenge. It referred to all the judgments i .....

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ised when the adverse judgment is pronounced. Such a right is governed by the law which prevails on the date of institution of the suit or proceeding and not by the law that prevails at the date of the decision or on the date of the filing of an appeal. Moreover, the vested right of an appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise. 18. Justice G.P. Singh in his treatise on Statutory Interpretation has .....

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to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is "deemed to be prospective only 'nova constitutio futuris formam imponere debet non praeteritis [2 c. Int. 392]". In the words of LORD BLANESBURG, "provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment."< .....

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ords or necessary implication, there is a subordinate rule to the effect that a statute or a section in it is not to be construed so as to have larger retrospective operation than its language renders necessary. In other words close attention must be paid to the language of the statutory provision for determining the scope of the retrospectivity intended by Parliament." (emphasis supplied) 19. Parliament while substituting the provisions of Section 35F of the Central E .....

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, 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 .....

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peals which are filed on and after the enforcement of the amended provision on 6 August 2014 shall be governed by the requirement of pre-deposit as stipulated therein. The only category to which the provision will not apply that would be those where the appeals or, as the case may be, stay applications were pending before the appellate authority prior to the commencement of Finance (No.2) Act, 2014. 20. The Division Bench thus clarified that the prescription that the Tribunal or the .....

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ision would not apply would be those appeals and stay applications which were pending prior to the commencement of the Finance Act No.2 of 2014. The Division Bench expressed its disagreement with the view of the Kerala High Court. The Division Bench held that the express language of the amended provisions of section 35F(1), particularly the provisos cannot be ignored. 21. Having perused this judgment of the Division Bench and its reasoning, we are clear that section 35F cannot be held .....

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biguous, 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 .....

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High Court of Madras, the substantive provision section 35F after its amendment, is not capable of any other interpretation. Though the second proviso was referred, but the Division Bench independent thereof, agreed with the contention of the Revenue which is that the amended provision would have to be applied to all such appeals as falling within the second proviso. 23. We also arrive at the same conclusion and, therefore, it is not necessary for us to reproduce each and every para .....

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