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2017 (12) TMI 1673 - AT - Central Excise100% EOU - Waiver of pre-deposit confirmed by way of impugned orders - 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? - Held that - The Hon ble High Court examined the issue of inherent power of the appellate authority to grant interim protection against imposition of such condition and held the first appellate authority is having power to grant interim protection - the provisions of Rule 62(5) of Punjab VAT Act 2005 and Section 35(F) of Central Excise Act 1944 are pari materia. Punjab & Haryana High Court has taken a view 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 - thus Tribunal is having inherent power to grant interim protection to the applicant. Whether the applicants are having a case for waiver of pre-deposit or not? - difference of opinion - the matter placed 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.
Issues Involved:
1. Whether the Tribunal has inherent power to grant interim protection against the mandatory pre-deposit condition under Section 35F of the Central Excise Act, 1944. 2. Whether the applicants have a prima facie case for waiver of pre-deposit. Issue-wise Detailed Analysis: Issue No. 1: Inherent Power to Grant Interim Protection The Tribunal examined whether it has the inherent power to grant interim protection against the mandatory pre-deposit condition under the amended Section 35F of the Central Excise Act, 1944. The applicants argued that the Tribunal should have such power, citing the Punjab State Power Corporation case under the Punjab VAT Act, which has similar pre-deposit provisions. However, the Tribunal noted significant differences between the Central Excise Act and the Punjab VAT Act, including the graded scheme of pre-deposit and the cap on the amount required to be deposited under the Central Excise Act. The Tribunal also considered the interim order of the Punjab & Haryana High Court in the Super Threading India Pvt. Ltd. case, which granted interim relief from the pre-deposit condition. However, it was determined that this interim order was not a binding precedent as it was not a final judgment and was disposed of as infructuous. The Tribunal concluded that it does not have inherent power to grant interim protection against the mandatory pre-deposit condition, as the amended Section 35F explicitly requires such a deposit for the appeal to be entertained. The Tribunal emphasized that it must follow the legislative mandate, which leaves no room for exceptions. Issue No. 2: Prima Facie Case for Waiver of Pre-deposit The applicants argued that they had a strong prima facie case for waiver of pre-deposit, citing a previous Tribunal decision in their favor regarding their Karnal unit. The Tribunal had previously held that the process of converting paddy into rice does not amount to manufacture, and thus, the goods were not excisable. The respondents, however, contended that the applicants were required to make the mandatory pre-deposit as per the amended Section 35F, regardless of their prima facie case. They cited various High Court decisions, including those of the Allahabad, Delhi, and Bombay High Courts, which upheld the applicability of the amended Section 35F to appeals filed after 6-8-2014, even if the show cause notice was issued before that date. The Tribunal acknowledged the applicants' strong prima facie case but reiterated that the mandatory pre-deposit requirement under the amended Section 35F must be adhered to. It concluded that the applicants are required to make the pre-deposit to proceed with their appeals. Separate Judgments: Member (Judicial): Ashok Jindal opined that the Tribunal has inherent power to grant interim protection and that the applicants had a prima facie case for waiver of pre-deposit. He relied on the Punjab State Power Corporation case and the interim order in the Super Threading India Pvt. Ltd. case. Member (Technical): Devender Singh disagreed, stating that the Tribunal does not have inherent power to grant interim protection against the mandatory pre-deposit condition. He emphasized that the amended Section 35F is clear and must be followed. He also noted that the interim order in the Super Threading India Pvt. Ltd. case is not a binding precedent. Third Member on Reference: Archana Wadhwa agreed with the Member (Technical), concluding that the Tribunal does not have inherent power to grant interim protection and that the applicants must comply with the mandatory pre-deposit requirement under the amended Section 35F. Final Order: In view of the majority decision, the applicants were directed to make the mandatory pre-deposit within four weeks and report compliance.
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