2016 (11) TMI 1339 - AT - Central Excise

Pre-deposit - Section 35 F of the Central Excise Act 1944 /Section 129E of the Customs Act, 1962 - Held that - it is mandatory for appeals filed after 06-08-2014 to make pre-deposit of prescribed percentage of duty demanded or penalty imposed before filing appeal as mandated in Section 35F of the Central Excise Act, 1944 / Section 129E of the Customs Act, 1962 and as made applicable to Service Tax matters vide Section 83 of Finance Act, 1994. There is no provision whatsoever in the said statutory provisions for any waiver or relaxation or condonation of such pre-deposit for any reason including financial hardship or having good prima facie case on merits etc. The appeals filed by appellants herein above are not maintainable and are rejected in limine.

Issues Involved:
1. Applicability of mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 / Section 129E of the Customs Act, 1962.
2. Validity of appeals filed without the mandatory pre-deposit.
3. Financial hardship as a ground for waiver of pre-deposit.

Issue-wise Detailed Analysis:

1. Applicability of Mandatory Pre-Deposit:
The primary issue is whether the mandatory pre-deposit requirement under the amended Section 35F of the Central Excise Act, 1944, and Section 129E of the Customs Act, 1962, applies to appeals filed after the enforcement date of 6th August 2014. The appellants argued that their right to appeal crystallized before the amendment and thus should be governed by the un-amended provisions. They relied on various High Court decisions, including Muthoot Finance Ltd Vs UOI and K. Rama Mohana Rao & Co. Vs UOI, which suggested that the amended provisions should not apply retrospectively.

However, the Tribunal noted that the Single Bench judgment in Muthoot Finance Ltd was modified by a Division Bench, and the interim order in K. Rama Mohana Rao & Co. was distinguished by several other High Court judgments. The Tribunal referred to the judgments of the Allahabad High Court in Ganesh Yadav Vs UOI and the Delhi High Court in Anjani Techno Plast Ltd V Commissioner Cus, which clarified that the amended provisions apply to all appeals filed on or after 6th August 2014.

2. Validity of Appeals Filed Without Mandatory Pre-Deposit:
The Tribunal emphasized that the language of the amended Section 35F is unambiguous and mandates that no appeal shall be entertained unless the appellant deposits the stipulated percentage of duty or penalty. This provision applies to all appeals filed on or after the enforcement date. The Tribunal highlighted the second proviso, which exempts only those appeals and stay applications pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. Consequently, the appeals filed by the appellants without the mandatory pre-deposit were deemed non-maintainable.

3. Financial Hardship as a Ground for Waiver of Pre-Deposit:
One of the appellants, M/s Sai Rayalaseema Paper Mills, argued that they were unable to pay the mandatory pre-deposit due to being declared a Sick Company under BIFR and facing acute financial crunch. The Tribunal, however, held that there is no provision in the statutory amendments for any waiver, relaxation, or condonation of the mandatory pre-deposit requirement, irrespective of financial hardship or a strong prima facie case on merits.

Conclusion:
The Tribunal, adhering to the ratio laid down by various High Court judgments, concluded that it is mandatory for appeals filed after 6th August 2014 to comply with the pre-deposit requirement as stipulated in Section 35F of the Central Excise Act, 1944, and Section 129E of the Customs Act, 1962. The appeals filed without making the mandatory pre-deposit were rejected in limine, and no exceptions were made for financial hardship or other grounds.

Operative Part:
The operative part of the order was pronounced in court at the conclusion of the hearing, affirming the mandatory nature of the pre-deposit requirement and dismissing the appeals for non-compliance.

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