2018 (11) TMI 522 - HC - Central Excise

Waiver of pre-deposit - Vires of Section 35F of The Central Excise Act, 1944 - requirement of pre-deposit for entertaining appeal - inherent power of Tribunal to waive off pre-deposit in exceptional cases - Held that - There is a little doubt that the Tribunal which is a creation of statute is bound by the procedure of a statute - In this particular case, when the provisions of Section 35F of the Act gives no flexibility waiving off the pre-condition of a deposit, there would be little room to hold the order of the Tribunal as erroneous. There would be no escape from pre-deposit as the Tribunal lacks the power to entertain the appeal without it - If we have to lend any other interpretation, it would defeat the legislative intent which is so clearly visible from the provisions of Section 35-F of the Act and in fact, there would have been no necessity of amendment and Section 129(E) in its un-amended form need not have been tinkered with. Petition dismissed.

Issues Involved:
1. Constitutionality of Section 35F of The Central Excise Act, 1944.
2. Tribunal's refusal to entertain the appeal due to non-compliance with Section 35F.
3. Petitioner's claim of hardship and inability to deposit the demanded amount.
4. Comparison of Section 35F with Section 62(5) of Punjab Value Added Tax Act, 2005.
5. Applicability of amended Section 35F to pending proceedings.
6. Tribunal's inherent power to waive the pre-condition of deposit.

Detailed Analysis:

1. Constitutionality of Section 35F of The Central Excise Act, 1944:
The petitioner challenged the constitutionality of Section 35F, arguing that it is unconstitutional. The court, however, upheld the validity of Section 35F, referencing prior judgments that established the legitimacy of mandatory pre-deposit requirements for appeals. The court noted that the legislative intent behind the amendment was to expedite the disposal of appeals and reduce litigation over stay applications.

2. Tribunal's Refusal to Entertain the Appeal:
The Tribunal refused to entertain the petitioner's appeal due to non-compliance with the mandatory pre-deposit requirement under Section 35F. The Tribunal relied on its previous decision in Dunar Foods Limited Vs. CCE Ludhiana, which mandated the pre-deposit. The court found no fault with the Tribunal's reliance on its precedent, affirming that the Tribunal is bound by the statutory requirements.

3. Petitioner's Claim of Hardship:
The petitioner argued that the Tribunal should have the inherent power to waive the pre-deposit requirement in cases of undue hardship. The court examined this claim but concluded that Section 35F does not provide any flexibility for waiving the pre-deposit. The court emphasized that the legislative intent was clear and that allowing such waivers would defeat the purpose of the amendment.

4. Comparison with Section 62(5) of Punjab Value Added Tax Act, 2005:
The petitioner compared Section 35F with Section 62(5) of the Punjab Value Added Tax Act, 2005, which allows some discretion to the appellate authority regarding pre-deposits. The court found this comparison unpersuasive, noting that the language of Section 35F is unambiguous and does not provide for any discretion. The court highlighted that the Punjab State Power Corporation case, which interpreted Section 62(5), involved different statutory language that allowed for some flexibility.

5. Applicability of Amended Section 35F to Pending Proceedings:
The court addressed whether the amended Section 35F applies to proceedings initiated before its enactment. Citing the Allahabad High Court's decision in M/s Ganesh Yadav Vs. Union of India, the court concluded that the amended provision applies to all appeals filed after its enforcement date. The court emphasized that the right to appeal is governed by the law in effect at the time of filing the appeal, not at the time of the original proceeding.

6. Tribunal's Inherent Power to Waive Pre-deposit:
The court rejected the argument that the Tribunal has inherent power to waive the pre-deposit requirement. The court stated that the Tribunal, being a creation of statute, must adhere to the statutory provisions. The court noted that previous judgments upholding the validity of pre-deposit requirements support this interpretation.

Conclusion:
The court dismissed all the writ petitions, concluding that the Tribunal lacks the power to entertain appeals without the mandatory pre-deposit as required by Section 35F. The court granted the petitioner four weeks to make the necessary deposit, allowing the Tribunal to hear the appeal on merits thereafter. The interim order preventing dismissal of the appeal for non-compliance with the pre-deposit condition was lifted.

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