CX - Mandatory pre-deposit is applicable even in those cases where proceedings have been initiated prior to enactment: CESTAT
By TIOL News Service
MUMBAI, APRIL 14, 2017: AGAINST an o-in-o passed by the CCE, Aurangabad on 12.08.2016, the applicant has filed before the CESTAT, a condonation of delay application, stay application and application for dispensing with the pre-deposit of penalty of 7.5% of Rs.25 lakhs.
The applicant submits that since the case pertains to the period prior to amendment of Section 35F that was enacted on 06.08.2014, the un-amended Section 35F is applicable and in terms of which the Tribunal has discretion to entertain the stay application and has power to dispense with the requirement of pre-deposit of duty or penalty, as the case may be.
Reliance is placed on the following judgments -
(i) Fifth Avenue Sourcing (P) Ltd. vs. CST - 2015-TIOL-1592-HC-MAD-ST
(ii) GarikapattiVeeraya vs. SubbaihChoudhury AIR 1957 SC 540
(iii) Indira Sohanlal vs. Custodian of Evacuee Property AIR 1956 SC 77.
(iv) HooseinKasam Dada (India) Ltd. vs. The State of Madhya Pradesh - 2002-TIOL-363-SC-CT
(v) The Deputy Commercial Tax Officer vs. Cameo Exports 2006 (3) CTC 81J.
The AR submitted that pre-deposit of 7.5% is the requirement, for filing appeal before the Tribunal, which became effective from the enactment of the Finance Bill, 2014; therefore, date of the initiation of the proceeding is not relevant for the purpose of mandatory pre-deposit of 7.5%.
Support was drawn from the following decisions -
- Supermax Personal Care P. Ltd. vs. CCE - 2016-TIOL-1421-CESTAT-MUM
- Suvidha Signs Studios Pvt. Ltd. vs. UOI - 2016-TIOL-843-HC-DEL-CX
- Pioneer Corporation vs. UOI - 2016-TIOL-1116-HC-Del-CX
- Nimbus Communications Ltd. - 2016-TIOL-1708-HC-MUM-ST
The CESTAT observed that the issue had come up earlier also and the tribunal in the decisions cited by the AR has taken a consistent view that mandatory pre-deposit is applicable in those cases where the proceedings have been initiated prior to enactment of the amendment to Section 35F by which the 7.5% pre-deposit was made mandatory.
After extracting the substituted section 35F of the CEA, 1944, the Bench noted thus -
"5. From a plain reading of the aforesaid Section 35F, it is clear that the pre-deposit of 7.5% is pre-requisite for filing appeal in this Tribunal and it is not related to proceedings of the appeal. Therefore, deposit of 7.5% is requirement for filing the appeal before this Tribunal. Therefore, the submission of ld. counsel that it is to be taken from the date of initiation of the proceedings is absolutely irrelevant. If the legislators have any intention not to collect 7.5% in cases where the proceedings have been initiated prior to enactment of Finance Bill, 2014, the same would have been incorporated in amended Section 35F explicitly. In the absence of such explicit provision, there is no scope for interpretation that the 7.5% is required only in cases wherein the proceedings have been initiated on or after the amended section 35F in the Finance Bill, 2014. On the same issue, the Jurisdictional High Court in the case of Nimbus Communications Ltd. (2016-TIOL-1708-HC-MUM-ST) clearly held that as per amended section 35F the compliance of deposit of 7.5% is required when appeal filed after 06.08.2014 even if show-cause notice issued prior to such amendment."
After reproducing the order of Bombay High Court delivered in the case of Nimbus Communications Ltd., the Bench further observed -
"6. In the above judgment, the jurisdictional High Court has considered the issue in hand raised by the applicant. Therefore, we need not visit the various judgments cited by the ld. counsel, as jurisdiction High Court judgment is binding on this Tribunal.
7. As per our above discussion, we are of the considered view that the applicant is required to make a pre-deposit of 7.5% of the adjudged dues which the applicant failed to do so. On question to the ld. counsel from this bench, that if appellant is ready to deposit 7.5% a reasonable time can be given, the answer of Ld. counsel is in negative . Therefore the appeal is not maintainable for want of pre-deposit in terms of Section 35F…."
The appeal was dismissed and the applications for stay and condonation of delay were also dismissed as infructuous.
In passing: All for Rs.1,87,500/-
For the want of a nail the shoe was lost,
For the want of a shoe the horse was lost,
For the want of a horse the rider was lost,
For the want of a rider the battle was lost,
For the want of a battle the kingdom was lost,
And all for the want of a horseshoe-nail.
(See 2017-TIOL-1246-CESTAT-MUM )
