ST - CESTAT is a creature of very Act of which said Sec 35F is part and, therefore, it cannot go beyond provisions of Act which has created it - Pre-deposit is mandatory in respect of appeals filed after 06.08.2014 - Fact that SCN was issued before 06.08.2014 is of no relevance: CESTAT
By TIOL News Service
NEW DELHI, JULY 07, 2015: THE issue before the CESTAT, Delhi Bench is whether pre-deposit of 7.5% of the impugned service tax liability in terms of Section 35F (as amended w.e.f. 6.8.2014) of the CEA, 1944 r/w s. 83 of the Finance Act, 1994 is required to be made while filing appeal against order-in-original dated 29.8.2014 when the Show Cause notice in respect thereof was issued before 6.8.2014.
Incidentally, a similar issue had come up before the CESTAT, West Zonal Bench, Mumbai in the case of Maneesh Export - 2015-TIOL-1093-CESTAT-MUM and the Division Bench had held thus -
CX - Pre-deposit - Date of SCN and period involved is not relevant - substituted Section 35F will be applicable to all the appeals filed after the commencement of the FA, 2014 - since pre-deposit not made of 7.5%, appeals are not maintainable, hence dismissed: CESTAT
Be that as it may, in the present case the appellant submitted that the mandatory pre-deposit is not required because the lis in question commenced prior to the introduction of the amended s.35F and, therefore, the appeal should be dealt with in terms of the provisionof law as they existed prior to 06.08.2014. The appellant takes the assistance of the following judgements - namely, Muthoot Finance Ltd. - 2015-TIOL-632-HC-KERALA-ST, M/s A.M. Motors - 2015-TIOL-1069-HC-KERALA-ST and M/s Super Threading (India) Pvt. ltd. and Another Vs. Union of India and Others - CWP-7696-2015.
The AR inter alia submitted that the judgments cited do not lay down a ratio with regard to the applicability or otherwise of the amended Section 35F in respect of appeals filed on or after 6.8.2014. Decision of Rajasthan High Court in the case of RSID Investment Corp. Ltd. Vs. UOI is adverted to.
The Division Bench of the CESTAT distinguished the judgments cited by the appellant by inter alia observing thus -
++ In the case of A.M. Motors and Muthoot Finance Ltd. , the High Court had taken note of the judgement of the Andhra Pradesh High Court - 2015-TIOL-511-HC-AP-CX wherein the Hon'ble Andhra Pradesh High Court had taken a prima facie view …
++ The Hon'ble Kerala High Court observed that the said view seems to be consistent with the settled law.
++ Vide the said judgements, Hon'ble Kerala High Court allowed the respective petitioners to file appeal before CESTAT and ordered that the CESTAT shall deal with those appeals in terms of the provisions of Section 35F as they stood prior to 6.8.2014.
++ Thus, Hon'ble Kerala High Court did not lay down any ratio with regard to the general applicability of the provisions of Section 35F as they stood prior to 6.8.2014 in respect of appeals filed on or after the said date and the said orders in respect of respective petitioners were issued in exercise of its writ jurisdiction in the given circumstances after taking note of a prima facie view of the Andhra Pradesh High Court in that regard.
++ The judgement of Punjab & Haryana High Court in the case of M/s Super Threading (India) Pvt. Ltd. and Another was issued taking note of the order in the case of Muthoot Finance and does not really lay down any ratio. It is settled law that it is the ratio of a judgement that constitutes a precedent.
++ On the other hand, the Rajasthan High Court in the Writ Petition of Paramount Security considering the effect of the substituted provisions of Section 35F with effect from 6.8.2014 has recorded an opinion that "the effect of the amendment cannot be restricted only for those appeals which are filed after 6.8.2014. Such a restriction will be violative of Article 14 of the Constitution of India. The amended provisions, thus will apply to even those orders, which have been passed before the amendment was made effective ".
++ The High Court directed that in the meantime the appeal shall not be dismissed by the Tribunal provided the petitioner complies with the condition of pre-deposit in terms of amending Section 35F introduced with effect from 6.8.2014 within four weeks. Thus the Rajasthan High Court's opinion is totally at variance with the view of Hon'ble Kerala High Court but even Rajasthan High Court's opinion has not attained the status of a binding precedent.
After extracting the provisions of s.35F of the CEA, 1944 as appearing w.e.f 06.08.2014, the CESTA Tharped on the second proviso appearing in the substituted section -
"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 - i.e. 6.8.2014."
The Bench thereafter made the following observations-
+ We find that the second proviso to amended Section 35F does not leave any scope for interpretational ambiguity with regard to the appeals filed prior to 6.8.2014. Thus the requirement of mandatory pre-deposit is squarely applicable to all appeals filed on or after 6.8.2014 and the amended Section 35F makes no distinction whether the show cause notices in respect of such appeals were issued prior to, on or after 6.8.2014.
+ CESTAT is a creature of the very Act of which the said Section 35F is part and therefore it cannot go beyond the provisions of the Act which has created it.
+ Indeed, in the case of Ahluwalia Construction Group (supra),CESTAT, while deciding the issue at hand, after taking due note of the judgement of the Hon'ble Supreme Court in the case of HosseinKasam Dada (India) Ltd. Vs. State of Madhya Pradesh - 2002-TIOL-363-SC-CT held that CESTAT cannot entertain any appeal filed on or after 6.8.2014 without the mandatory pre-deposit as per the provisions of Section 35F of Central Excise Act, 1944 as amended after 6.8.2014.
In fine, it was held that the appellant is required to make the mandatory pre-deposit in terms of Section 35F of CEA, 1944 as amended w.e.f6.8.2014 and in the absence of such pre-deposit the appeal shall not be entertained.
In passing: For more, see Al Champdany Industries Ltd - 2015-TOL-576-CESTAT-KOL [ Pre-deposit mandatory even in respect of orders passed prior to 06.08.2014 and appeals filed thereafter] and Arjun Industries - 2015-TIOL-1364-HC-RAJ-Cus. [Section 35F amendment cannot be restricted only for appeals filed after 06.08.2014 - Appellant directed to deposit 10% of duty confirmed]
(See 2015-TIOL-1355-CESTAT-DEL)
