TMI Blog2017 (12) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... aced before the Hon'ble President to refer the matter to the third member to resolve the issues - Held that:- In view of the majority decision, the applicant is directed to make mandatory pre-deposit in terms of Section 35F of Central Excise Act, 1944 within a period of four weeks and to report compliance on 8-1-2018. - Application Nos. E/Stay/60137, 60133, 60135 & 60423-60425/2016 in Appeal Nos. E/60073-60075 & 60521-60523/2016 - Stay Order Nos. S/60566-60571/2017-EX(DB) and Interim Order Nos. 13-18/2017 - Dated:- 4-12-2017 - Shri Ashok Jindal, Member (J), Devender Singh, Member (T) and Third Member on Reference : Archana Wadhwa, Member (J) Present for the Appellant: Shri Manoj K. Singh, Advocate Present for the Respondent: Shri Sourabh Goel, Sr. Standing Counsel, Shri G.M. Sharma, AR Per: Ashok Jindal The applicants have filed the applications for waiver of pre-deposit confirmed by way of impugned orders for entertaining the appeals. As the issue involved in all the stay applications is common, therefore, they are disposed of by this common order. 2. The brief facts of the case are that the applicants are engaged in the export of basmati rice and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Allahabad High Court in the case of Ganesh Yadav Vs. Union of India-2015 (320) ELT 711 (All) , the decision of Hon'ble Delhi High Court in the case of Pioneer Corporation Vs. Union of India-2016 (340) ELT 63 (Del) and decision in Anjani Technoplasts Ltd. Vs. CCE - 2015 (326) ELT 472 (Del.). 4. Learned Counsel for the respondent further submits that the decision in the case of Super Threading (I) Pvt. Ltd. Vs. Union of India passed by the Hon'ble Punjab and Haryana High Court in CWP No.7696 of 2015 is not binding precedent. As the order of Hon'ble High Court passed on 24.4.2015 was an interim order and that does not become a binding precedent. It is also pertinent to mention that the said writ petition was ultimately rendered infructuous and no binding judgement was passed by the Hon'ble High Court in the said case. He further submits that the department has strong case for demand of duty, interest and penalty from the appellants. He also submits that the judgement of the Hon'ble Punjab and Haryana High Court dated 23.12.2015 in the case of Punjab State Power Corporation Ltd. Vs. State of Punjab is not applicable to the present case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orum, therefore, the applicants are having prima facie strong case in their favour. 7. He further submits that the applicants have filed the applications under section 35F of the Act praying for stay of operation of the impugned order/waiver of pre-deposit demanding duty alongwith interest and penalty amount. He also prayed that the applicant is facing acute financial hardship and is not in a position to make any pre-deposit. He also relied on the case law of Super Threading India Pvt. Ltd. Vs. Union of India (supra) wherein the Hon'ble Punjab Haryana High Court has held that the respondent shall not treat the appeal as being not maintainable on account of failure to deposit the amounts as per amended section 35F of the Central Excise Act, 1944 which came into existence on 6.8.2014. The Hon'ble High Court has also directed in the said case to the petitioner to make an application for interim reliefs for staying the demand on the basis of the provisions as they stood prior to 06.08.2014. This Tribunal in a similar circumstance had considered the stay application without insisting on pre-deposit as per amended section 35F of the Act and ordered accordingly. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in their favour and the applicant has prayed for financial hardship, in that circumstance, the balance of convenience lies in favour of the applicants. An order for pre-deposit will prejudice the interest of the applicants and is like to cause grave irreparable injury to the applicants and on the other hand if the present stay applications are allowed, no loss will be caused to the respondent. Therefore, he prayed that waiver of pre-deposit be granted. 11. Heard the parties and considered the submissions. 12. After hearing the parties, we find that from the argument advanced by the learned Counsels, the following issues emerged before us: (1) Whether this Tribunal has inherent power to grant interim protection against imposition of such condition of mandatory pre-deposit for hearing the appeal on merits under section 35F of the Act or not? (2) If yes, whether the applicants are having a case for waiver of pre-deposit or not? Issue No-1 13. To answer the Issue No.1, the learned Counsel for the respondent submits that as per amended section 35F, any appeal filed after 6.8.2014, the applicant is required to make mandatory pre-deposit. Therefore, the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n merits? the said issue has been examined by the Hon'ble High Court in detail and observed as under: 26. Taking up the issue of inherent power of the Court, it may be observed that the constitution of India and the statures confer different jurisdiction on the Court whereas inherent powers of the court are those necessary for ordinary and efficient exercise of jurisdiction already conferred. They are as such result of the very nature of its organization and are essential to its existence and protection and for the due administration of justice. The inherent power of a court is the power to do all things that are reasonably necessary for administration of justice within the scope of court's jurisdiction. The basic principal is to be found in Maxwell On Interpretation of statutes, eleventh Edition at page 350. The statement contained therein is that where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means as are essentially necessary to its execution. Learned counsel for the petitioners vehemently argued that the provision has to be read down to include the right to waive the condition by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in section 220(6) which is confined only to the stage of pendency at an appeal before the Appellate Assistant Commissioner. The argument advanced on behalf of the appellant before us that in the absence of any express provisions in sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal it must be held that no such power can be exercised by the Tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income tax Officer who can give the necessary relief to an assessee. The right of appeal is a substantive right and the questions fact and law are at large and are open to review by the Appellate Tribunal. Indeed the Tribunal has been given very wide powers under section 254(1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income Tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is entirely helpless in the matter of stay or recovery the entire purpose of the appeal can be defeated if ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first appellate authority had dismissed the appeal for want of pre-deposit and further authority had dismissed the appeal for want of pre-deposit and further appeal has also been dismissed by the Tribunal on the same ground without touching the merits of the controversy. Where the appeals are pending without an application for interim injunction/protection before the first appellate authority, the petitioner may file an application for interim injunction/protection before the appeals are taken up for hearing by first appellate authority and in case such an application is filed, the same shall be decided by the said authority keeping in view all the legal principles enunciated hereinbefore. The other cases where the first appellate authority had dismissed the appeal for want of pre-deposit without touching merits of the controversy or further appeal has been dismissed by the Tribunal, the said orders are set aside and the matter is remitted to the first appellate authority where the petitioners may file an application for interim injunction/protection before the appeals are taken up for hearing by the first appellate authority who shall adjudicate the application for grant of interi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of any order passed under any of the provisions of this Act or the rules made thereunder or under Central Sales Tax Act, 1956 (Act No.74 of 1956). [*****] (7) In deciding an appeal, the appellate authority, after affording an opportunity of being heard to the parties, shall make an order - (a) affirming or amending or cancelling the assessment or the order under appeal; or (b) may pass such order, as it deems to be just and proper. (8) The appellate authority shall a speaking order while deciding an appeal and send copies of the order to the appellant and the officer whose order was a subject matter of appeal. 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 appeal - (i) under sub-section (1) of section 35, 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 a decision or an order passed by an officer of Central Excise lower in rank tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Super Threading (I) Pvt. Ltd. that an application under section 35F of the Act for waiver of pre-deposit is to be entertained by this Tribunal and in the case of Punjab State Power Corporation (supra) held that this Tribunal is having inherent power to grant interim protection against imposition of such condition. for hearing the appeal on merits. Therefore, we answer the issue No.1 in favour of the applicant and hold that this Tribunal is having inherent power to grant interim protection to the applicant. Issue No.2 22. Whether the applicants are having prima facie case for waiver of pre-deposit or not? 23. We find that in the applicant own case of Karnal unit , this Tribunal has held that the test of manufacture has failed as the goods are not manufactured goods as per section 2(f) of Central Excise Act, 1944, therefore, the questions of excisabiliy does not arise. 24. Further, we find that the learned Standing Counsel for the respondent heavily relied on the decision of Ganesh Trading Co. (supra) to say that paddy and rice are different commodities which is excisable. We find that in the case of Ganesh Trading Co. (supra), the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble High Court as infructuous. The Hon'ble High Court had granted interim relief to the petitioner and after disposing of the stay application by this Tribunal, the Hon'ble High Court found that nothing survives in the writ petitions filed by the petitioners. The order passed by the Hon'ble High Court thus remained an interim order as the petition was disposed of as infructuous and no final judgment/decision emanated. It is settled principle that interim orders are purely in the nature of an interim modality and workable formula or workable arrangement depending on the balance of convenience and not a binding precedent. In this regard, the Hon'ble Supreme Court in the case of Amresh Tiwari Vs. Lalta Prasad Dubey and another (2000) 4 SCC 440 = = 2000 SCC(Cri) 806 held as under:- It is settled law that interim orders, even though they may have been confirmed by the higher courts, never bind and do not prevent passing of contrary order at the stage of final hearing. In the case of Calvin Wooding Consulting Ltd. Vs. CCE, Mysore - 2007 (7) STR (411) (Tri. -Del.), this Tribunal made following observation Needless to say that, when an Interim O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons uniformly, without subjecting the assessees to the vagaries of weather prevailing in the offices of the Appellate Authorities/Tribunals. 79. We have actually come across several cases where the Tribunal has granted waiver of different percentages in cases of identical nature, without any rhyme or reason. In fact this Court is burdened with appeals both under Section 35G of the Central Excise Act and Section 130 of the Customs Act, 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. 80. 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 cause proceedings initiated on or after 6-8-2014 is liable to be dismissed. Accordingly it is dismissed. There will be no order as to costs. 31.2 In the case of Nimbus Communication Ltd. Vs. Commissioner of Service Tax, Mumbai-IV (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second proviso, then, it is not possible to agree with the appellant's Senior Counsel. More so, when the order-in-original was challenged in appeal which is filed in this case after 6th August, 2014, and the stay application was also after this date. Hence, the amended section is rightly applied to the above undisputed factual position. 24. We do not think that any provision of the nature pointed out in this appeal defeats or renders the vested right of appeal illusory. A very reasonable condition has been imposed and that, to our mind, in no way affects the vested right of appeal. 25. For the aforesaid reasons, we agree with the view taken by the Tribunal. We dismiss the appeal. There will be no order as to costs. 26. At this stage, Mr. Dada learned Senior Counsel submits that this Court should grant six months time to the appellant to comply with the statutory requirement and deposit the seven and a half per cent of the demand of duty and/or penalty in terms of the amended provision. This request is opposed by Ms. Cardozo. 27. Having heard both sides on this point, we direct that if the appellants deposit the sum mandated by Section 35F( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate authority prior to the commencement of Finance (No.2) Act, 2014. 21. Our attention has been drawn to a judgment of the learned Single Judge of the Kerala High Court in Muthoot Finance Ltd. v. 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. Union of India - 2015-TIOL-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 implication that all rights of appeal then in force are preserved to the parties. With great respect, the judgment of the learned Single Judge of the Kerala High Court has not considered the express language which has been used in the amended provisions of Section 35F(1) of the Act. The order of the Andhra Pradesh High Court which was relied upon in the judgment of the Kerala High Court is only an interim order. 22. For these reasons, we hold that the petitioner would not be justified in urging that the amended provisions of Section 35F(1) of the Act would not apply merely on the ground that the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, in the Central Excise Act, there is graded scheme of pre-deposit of duty or penalty - duty in case where duty or duty and penalty are there and penalty where only penalty is in dispute. (emphasis supplied). Moreover, in this graded scheme, 7.5% of duty or penalty is to be deposited before appeal to the Commissioner (Appeals). For appeal to the Tribunal, further deposit of 10% of the duty or penalty is required. Further, there is a cap of ₹ 10 crore on the amount that is required to be deposited under section 35F. There is no cap prescribed in Punjab Vat Act. 35. It is thus clear that there are significant differences in the wording, scheme of pre-deposit and onerousness between Section 62 of the Punjab Vat Act and Section 35F of the Central Excise Act. Besides, object, incidence of duty and scheme of law of the two Acts are different. 36. In view thereof, I hold that the Section 62 of Punjab VAT Act or Section 35F are not in pari materia . The Hon'ble Supreme Court in the case of CCE, Pune Vs. Dai Ichi Karkaria Ltd. - 1999 (112) E.L.T. 353 (S.C.), has held in Para 21 that judgments relating to Income Tax or other statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a binding a precedent applicable to the facts of this case or not; (b) Whether the judgments 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 the Hon ble High Court of Punjab Haryana under Punjab VAT Act, in the case of Punjab State Power Corporation (supra) consequently, the applicants are entitled for waiver of pre-deposit of impugned demands, during the pendency of the appeals. 41. The short-point required to be decided in the present case is as to whether the appellant is at liberty to file the stay petitions after 6-8-2014 when the new provisions of Section 35F were introduced in the statute book and as to whether the Tribunal is within its jurisdiction to decide upon the said stay petitions. Further, as to whether the Tribunal has the inherent powers to grant interim protection to the appellant from the condition of pre-deposits, as required in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal and in exercise of its jurisdiction, in terms of Section 35F as that existed prior to 6-8-2014, the Tribunal would have granted unconditional stay and would have dispensed from pre-deposit, as the issue was decided in favour of the assessee by the earlier decision of the Tribunal. However, it is seen that the situation has now changed and amended Section 35F mandates the Tribunal not to entertain any appeal unless the deposits required therein stand made by the appellant. As is noted, the expression used in Section 35F is that the Tribunal shall not entertain any appeal unless the appellant has deposited the directed amounts as contained in subclause (i) or sub-clauses (ii) of the said section. The expression shall in a common parlance is a term which has always a compulsory meaning and its ordinary import is obligatory. The courts have held that such a connotation need not be given in each and every case and the provisions can be interpreted as directory, depending upon the purpose which the legislature intend to achieve (ref : M/s. Rubber House v. Excelsion Needle Industries Pvt. Ltd. - AIR 1989 SC 1160. The use of the expression shall in the amendment proposed in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 has held as under :- It is settled law that where a statute requires a particular act to be done in a particular manner, the act has to be done in that manner alone. Every word of the statute has to be given its due meaning. Further, in the case of State of Jharkhand and Others v. Ambey Cement and Another s - 2005 (1) SCC 368 = 2004 (178) E.L.T. 55 (S.C.), para 26 of the judgment, the court held as under :- It is the cardinal rule of the Interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. 46. Apart from the fact that such adoption of inherent powers cannot be appreciated when there is a clear provision of law requiring the Tribunal to do a particular thing in a particular manner, I am afraid that the same would also open plethora of situations where the Tribunal would grant such favours by holding, prima facie, merits of the case in favour of the appellant, thus leading to the pre-amendment situation. The legislative intent in amending provisions of Section 35F, requiring the assessee to deposit a particular percentage of the demand confirmed against them, would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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