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2022 (5) TMI 9 - HC - Central ExciseMaintainability of appeal before the Tribunal - non-fulfillment of the condition of pre-deposit of 7.5% of the duty subject to the amount specified in the first proviso to Section 35(F) of the Central Excise Act, 1944 - Valuation of goods - method of valuation - iron ore pellets - applicability of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 4 of said Rules - related party transaction or not - Demand of differential duty alongwith interest and penalty - HELD THAT - As is revealed from the record, it is admitted fact that the petitioner had not deposited as statutorily required to do under Section 35F of the Central Excise Act. However, enclosing copy of e-receipt to the Memo dated 19.04.2022 the counsel for the petitioner submitted that the petitionercompany has made a payment of Rs.10,00,00,000/- (rupees ten crores) which is the maximum amount specified under the first proviso to Section 35F of the Central Excise Act for compliance of mandatory requirement for entertainment of appeal. The position as of now stands can be summarized as prior to 06.08.2014, the pre-deposit of percentage of duty confirmed or penalty imposed for filing appeal before the Commissioner (Appeals) or the CESTAT was not mandatory and decision in this regard was to be taken by the Commissioner (Appeals) and/or the CESTAT on the merit of the case. The Appellate Authority was vested with discretion to decide the amount of pre-deposit required to be made by the appellant after taking into consideration the merits of the case and/or considering financial hardship caused to the assessee. This apart, safeguard of the interest of revenue was also one of the factors. The Appellate Authority was even competent to order for partial predeposit or to waive the pre-deposit altogether. However, with effect from 06.08.2014, such discretion of the Commissioner (Appeals) and/or CESTAT has been dispensed with. If the prescribed pre-deposit is not made by the time of entertainment of the appeal, the appeal is liable for rejection. It is an undisputed position that a right to file an appeal is not an absolute right but a right bestowed by the statute. Thus, such a statutory right of appeal can be made subject to conditions. However, though the right of appeal has been made conditional by Section 35F of the Central Excise Act, 1944 it is unambiguously suggested that a party who desires to challenge the Order-in-Original in appeal shall have to deposit in terms of provisions contained in Section 35F of the Central Excise Act. The requirement to make such deposit is to be fulfilled for the purpose of entertainment of appeal and not filing of the appeal - Since the Order-in-Original itself is dated 29th November, 2017, i.e., much after Section 35F has been amended with effect from 6th August, 2014, the Petitioner cannot avail a benefit of second proviso to Section 35F Act (post amendment). By the date of entertainment of appeal no evidence was placed on record by the petitioner-appellant to show that it had complied with the condition hedged for entertainment of appeal . However, in view of the undisputed contents of the Memo dated 19.04.2022 and the application accompanied by the affidavit and no objection being raised by the counsel for the Revenue to take up the main writ petition for hearing and setting aside the order dated 19th March, 2018 passed by the CESTAT - Considering the fact that the Petitioner has deposited Rs.10,00,00,000/- as condition for entertainment of appeal as required under Section 35F of the Central Excise Act, 1944 in consonance with the amended provision, this Court directs for no coercive measure for recovery of the rest of the demand raised pursuant to Orderin- Original dated 29th November, 2011 by the Commissioner of Central Tax, GST CX Commissionerate, Rourkela be taken till disposal of the appeal by the CESTAT. Petition disposed off.
Issues Involved:
1. Validity of the demand of differential excise duty. 2. Applicability of Rule 8 versus Rule 4 of the Central Excise Valuation Rules, 2000. 3. Waiver of pre-deposit under Section 35F of the Central Excise Act, 1944. 4. Delay in compliance with the pre-deposit condition. 5. Statutory interpretation of Section 35F pre and post-amendment. Detailed Analysis: 1. Validity of the Demand of Differential Excise Duty: The petitioner challenged the order dated 19th March 2018 by the CESTAT, which affirmed the demand of differential excise duty amounting to Rs. 333,22,45,002/- along with interest and penalty. The demand was initially raised by the Commissioner of Central Tax, GST & CX Commissionerate, Rourkela, through an Order-in-Original dated 29th November 2017. The affirmation was due to non-fulfillment of the pre-deposit condition as per Section 35F of the Central Excise Act, 1944. 2. Applicability of Rule 8 versus Rule 4 of the Central Excise Valuation Rules, 2000: The petitioner contended that the valuation of iron ore pellets cleared from its unit should have been in terms of Rule 8, as the clearances were made to its own units, which do not fall under "related units." The petitioner argued that the differential amount demanded was arbitrary and contrary to settled cases by the Courts/CESTAT. 3. Waiver of Pre-Deposit under Section 35F of the Central Excise Act, 1944: The petitioner argued that due to acute hardship and a strong prima facie case, it was entitled to a waiver of the pre-deposit requirement under Section 35F. The petitioner cited the Supreme Court judgment in Super Industries and Ors. Vrs. Commissioner of Central Excise and Customs, Vadodara, to support this contention. 4. Delay in Compliance with the Pre-Deposit Condition: The petitioner filed I.A. No. 4359 of 2022, seeking permission to deposit the amounts required for the pre-deposit condition to get a hearing on merits before the CESTAT. The petitioner submitted proof of payment of Rs. 10 crores as the pre-deposit, the maximum amount specified under the first proviso to Section 35F. The court noted that the delay in making the pre-deposit could be condoned based on settled law. 5. Statutory Interpretation of Section 35F Pre and Post-Amendment: The court examined the statutory provisions of Section 35F before and after the amendment by the Finance (No. 2) Act, 2014. Before the amendment, the appellant could seek a waiver of the deposit by demonstrating undue hardship. Post-amendment, the requirement to deposit 7.5% or 10% of the duty or penalty, subject to a maximum of Rs. 10 crores, became mandatory for the entertainment of appeals. The court cited various judgments, including Tecnimont Pvt. Ltd. Vrs. State of Punjab and Indian Oil Corporation Vrs. Odisha Sales Tax Tribunal, to emphasize that the right to appeal is statutory and can be conditional. Conclusion: The court set aside the CESTAT order dated 19th March 2018, subject to the petitioner depositing a cost of Rs. 1,00,000/- for the delay in pre-deposit. The CESTAT was directed to restore the appeal and decide it on its merits. The court also directed that no coercive measures be taken for the recovery of the remaining demand until the appeal's disposal by the CESTAT. The writ petition and the I.A. were disposed of accordingly.
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