2014 (12) TMI 697 - HC - Central Excise

Validity of order passed by Tribunal - Non compliance with pre deposit order - Whether Customs Excise and Service Tax Tribunal committed an error in allowing the assessee s appeal on merits when in such appeal the assessee had challenged the decision of the Commissioner dismissing its appeal for non-fulfillment of the predeposit requirement - Held that - in any appeal, where the decision under challenge relates to any duty demanded instead of goods, which are not under the control of the excise authorities or is respect to any penalty levied, the appellant has the duty to deposit with the adjudicating authority such duty demanded or the penalty levied. Unless such pre-deposit requirement is waived either completely or partially either unconditional or on such condition as may be imposed such requirement would have to be fulfilled. It was, in this background, that the Commissioner, while substantially waiving the pre-deposit requirement, insisted that against a duty demand of ₹ 17.59 lacs (rounded off) with matching penalty, the appellant should either deposit a sum of ₹ 3.50 lacs or offer bank guarantee for such sum. It was because that the appellant did not fulfill this requirement that the appeal came to be dismissed by the Commissioner. Even if the Tribunal was of the opinion that the entire pre-deposit requirement was to be waived in view of a strong case of the assessee or any other such ground, the Tribunal ought and should have passed such an order placing the appellant back before the Commissioner for his consideration. In the present case, the Tribunal, instead of adopting such a route, virtually converted itself into the first appellate authority. The Tribunal is the final fact finding authority. Any further appeal against the decision of the Tribunal before the High Court would be available only on substantial question of law. When the statute provides for two layers of screening at the appellate stage, for questions of law and facts, it would even otherwise be not desirable to by pass the first appellate stage and permit the Tribunal to entertain the appeal as first appellate authority. - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Whether the Customs Excise and Service Tax Tribunal erred in allowing the assessee's appeal on merits despite non-fulfillment of the pre-deposit requirement by the appellant?

Analysis:
The case involved an appeal against the Commissioner's order dismissing the appellant's appeal for not fulfilling the pre-deposit requirement. The appellant challenged the decision of the Commissioner, and the Tribunal allowed the appeal in its entirety based on the judgment of the High Court in a similar case. The Tribunal found that the issue revolved around the availment of ineligible Cenvat Credit on invoices from non-existing firms. Despite the revenue's contention that the issue was not covered by the previous judgment, the Tribunal relied on the High Court's decision and granted relief to the appellant.

The Commissioner had directed the appellant to deposit a specific amount or provide a bank guarantee as a pre-deposit requirement. When the appellant failed to comply, the Commissioner dismissed the appeal. The Tribunal's role was to determine whether the Commissioner's decision to impose the pre-deposit condition and subsequently dismiss the appeal was valid. The Tribunal should have first addressed this issue before delving into the merits of the case. The Tribunal acted as the first appellate authority, bypassing the statutory process of two layers of screening at the appellate stage for questions of law and facts.

Section 35F of the Central Excise Act mandates the deposit of duty demanded or penalty levied pending appeal. The provision allows for dispensation of such deposit under certain conditions to safeguard the interests of revenue. In this case, the Commissioner imposed a pre-deposit condition due to the nature of the case involving fraud and forgery. The Tribunal's decision to allow the appeal without addressing the pre-deposit issue was deemed improper. The judgments were quashed, and the proceedings were remanded back to the Tribunal for fresh reconsideration of the appeals.

In conclusion, the High Court set aside the Tribunal's decision and directed a fresh consideration of the appeals, emphasizing the importance of adhering to statutory procedures and addressing procedural issues before delving into the merits of the case. The judgment highlighted the significance of fulfilling pre-deposit requirements in appeals related to duty demands or penalties under the Central Excise Act.