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2016 (11) TMI 1339 - CESTAT HYDERABAD

2016 (11) TMI 1339 - CESTAT HYDERABAD - TMI - Pre-deposit - Section 35 F of the Central Excise Act, 1944 /Section 129E of the Customs Act,1962 - Held that: - it is mandatory for appeals filed after 06-08-2014 to make pre-deposit of prescribed percentage of duty demanded or penalty imposed before filing appeal, as mandated in Section 35F of the Central Excise Act,1944 / Section 129E of the Customs Act,1962 and as made applicable to Service Tax matters vide Section 83 of Finance Act,1994. - Th .....

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r. Madhu Mohan Damodhar, Member(Technical) Shri Hari Radhakrishnan, Advocate for Appellant 1 Shri A. Sarveshwara Rao, Advocate for Appellant 2 None for the Appellant 3 & Shir Bharat Ram, Advocates for the Appellant 4 Shri Guna Ranjan, AR for the Respondents [Order per: Sulekha Beevi, C.S,] 1. The appeals have been filed without making mandatory pre-deposit of the duty and or penalty in dispute as mandated in Section 35 F of the Central Excise Act, 1944 /Section 129E of the Customs Act,1962. .....

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s got crystallized when the lis arose. Therefore, the provisions of the un-amended Section 129E of the Customs Act, 1962 will apply. The appellant is taking this stand by placing reliance on the decision of the Hon ble High Court of Kerala in the case of Muthoot Finance Ltd Vs UOI reported in 2015(38) STR -1133(Ker), Super Threading (India) Pvt.Ltd. Vs UOI reported in 2015(323)ELT 119(P&H) and K.Rama Mohana Rao & Co. Vs UOI as reported in 2015(321) ELT 195(AP). 4. In respect of the appel .....

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isdictional High Court, ie. the High court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh in the case of K.Rama Mohana Rao & Co. Vs Union of India, 2015(321) EALT 195(AP), wherein their lordships held that: 6. We are of the prima facie view that on the date of initiation of proceedings the right to appeal also accrues on that date, as appeal is in continuation of the original proceedings. In other words, on the date of initiation of this the aforesaid amendment was .....

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s: - Ravinder Kumar Rishabchand Vs Commissioner of Customs(Appeals-I) Chennai, -2015(3254) LET-48(Mad). - Muthoot Financ Ltd. Vs Union of India - 2015(38)STR- 1133(Ker). Regarding the defect No.2, namely that appeal is not supported with certified copy of Order in Appeal, it was submitted that the same copy received by them by post from department was filed along with the appeal. 5. In respect of appellant Rahee Track Technologies Pvt. Ltd (Appeal No.E/20674/2015), no mandatory pre-deposit as en .....

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In respect of the appellant, M/s Sai Rayalaseema Paper Mills the Ld counsel Sri. Bharat Ram submitted that the appellant is unable to pay mandatory pre- deposit since they have been declared as a Sick Company under BIFR and hence facing acute financial crunch. 7. We have considered the oral and written submissions made in these matters. 8. In the first place, the, Single Bench judgment of the Hon ble High Court of Kerala in the Muthoot Finance Ltd case 2015(38) STR 1133 (ker) stands modified by .....

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UOI 2015 has inter alia observed as follows: Parliament while substituting the 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 .....

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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 Act as amended only in the case of those stay applications and appeals which were pending before any appellate authority prior to the commencement of Finance (No.2) Act, 2014. Consequently, both by virtue of the opening words of Se .....

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ur attention has been drawn to a judgement of the learned Single Judge of the Kerala High Court in Muthoot Finance Ltd. V/s Union of India - 2015-TIOL-632-HC-KERALA-ST = 2015 (320) E.L.T 51 (Ker.). The Kerala High Court has referred to an interim order passed by the Andhra Pradesh High Court in K. Rama Mohanarao V/s Union of India-2015-TOIL-511-HC-AP-CX. The Kerala High Court while adverting to the interim order referred to the settled law that the institution of a suit carries with it an implic .....

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amended provisions of Section 35F (1) of the Act would not apply merely on the ground that the notice to show cause was issued prior to the enforcement of Finance (No.2) Act, 2014. We find no merit in the constitutional challenge. The petition shall accordingly stand dismissed for the aforesaid reasons. Further, the Hon ble High of Court of Madras, in the case of Dream Castle Vs UOI 2016(43) STR 25 (MAD) inter alia held as follows: The third contention of the learned Senior Counsel for the writ .....

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uthoot Finance Limited has also been analysed in great detail by us. With great respect to these Courts, we have not agreed with the view taken by them, for the reasons that we have indicated in great detail while dealing with the first contention. Therefore, the third contention is also rejected. We do not know how the above passage goes to the rescue of the assesses. The argument of the assesses in the cases on hand is that the amendment would apply only to the proceedings that commence with t .....

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sit condition. If they lose the battle after exhausting all avenues, the assesses are obliged to pay the amount due, together with interest at a higher rate. Therefore, it is his contention that a provision that grants a temporary reprieve to the assesses need not necessarily be interpreted in such a harsh manner. But we do not agree. In fact the assesses should be more happy that they are not thrown at the mercy of the Appellate Authorities for considering the question of waiver of pre-deposit .....

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ct, against the orders of the Tribunal granting or refusing to grant waiver. Therefore, the amendment to the provision has actually taken away the possibility of an arbitrary exercise of power and along with it, the threat of multiplicity of proceedings even at the stage of waiver applications. Therefore, we are of the considered view that the writ petition in W.P. No. 13431 of 2015 seeking a declaration that the amended Section 35F of the Central Excise Act, 1944, is applicable only to show cau .....

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would not apply to his case. The learned Judge agreed with the said contention and allowed the assessee to file an appeal along with an application for waiver without making a pre-deposit of 7.5% as per the amendment. The interpretation given by the learned Judge to the amendment is not correct. Hence, the appeal of the Commissioner of Service Tax is liable to be allowed. Accordingly, W.A. No. 1424 of 2015 is allowed, the order of the learned Judge is set aside. It is open to the respondent to .....

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ement an Assessee in appeal was required to deposit the stipulated percentage of duty and if it failed to do so, the CESTAT shall not entertain the appeal. The amended Section 35F would, therefore, apply to all appeals filed on and from the date of the enforcement of the amended Section 35F of the CE Act. The Allahabad High Court declined to concur with the view expressed by the learned Single Judge of the Kerala High Court in Muthoot Finance Limited V/s. Union of India (supra) which in turn ref .....

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e had an effective statutory remedy before an appellate Tribunal. The High Court nevertheless stated that the appellate Tribunal would consider the application filed by the Petitioner for waiver of as pre-deposit on merits under the Finance Act, 1994 as it stood prior to the amendment introduced with effect from 16th August, 2014. With the greatest respect to the learned Single Judge who delivered the above decision it is not understood how, pursuant to the dismissal of the writ petition, any di .....

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rties. A demand of tax raised by way of SCN does not get crystallised till there is an adjudication of the SCN. There can be no parallel therefore with the institution of a suit. Thirdly, the clear language of the second proviso to amended Section 35F of the CE Act, the validity of which was not in challenge before either the Kerala High Court or the High Court of Telangana and Andhra Pradesh High Court in K. Rama Mohanarao V/s. Union of India (supra) does not permit such an interpretation. The .....

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the notice as regards the appeal that may be filed against the adjudication order pursuant to such SCN. As already observed, it is possible that pursuant to an SCN, the adjudication proceedings may be dropped if the adjudication authority comes to the conclusion that no demand requires to be created. Consequently, the relevant date if at all would be the date of creation of the demand which does not get crystallised till the adjudication order confirming the demand is passed. In any event, as f .....

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ications already pending before the appellate authority prior to the commencement of the Finance (No.2) Act, 2014 . i.e. 6th August, 2014. In other words, it would apply to all appeals filed on or after the said date. Therefore, what is to be seen is the date of filing of the appeal. If the appeal is filed on or after 6th August, 2014 then the condition stipulated in the amended Section 129E of the Act has to be fulfilled for the appeal to the entertained. The Court notes that as far as the pres .....

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d Section 35F of the CE Act and holds that the amended Section 129E of the Act will apply to all appeals filed under Section 130 of the Act on or after 6th August, 2014. In the present case, the Appellant deposited a sum of ₹ 4,95,532/- on 8th May 2015 which was admittedly not 7.5% of the demanded duty as confirmed by the order dated 10th October 2014 by the Commissioner of Customs (Export). This had to necessarily result in the dismissal of its appeal by the CESTAT. No substantial questio .....

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