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2017 (8) TMI 212 - AT - Central ExciseRequirement of pre-deposit - clandestine removal - broken rice, rice bran and basmati rice - 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 provisions of Rule 62(5) of Punjab VAT Act, 2005, and Section 35(F) of Central Excise Act, 1944 are pari materia and the Hon ble High Court held that the appellate authority has the inherent power to entertain the prayer of waiver of pre-deposit despite mandatory provisions of pre-deposit - this Tribunal is having inherent power to grant interim protection to the applicant - decided in favor of applicant. Whether the applicants are having prima facie case for waiver of pre-deposit or not? - Held that - there are significant differences in the wording, scheme of pre-deposit and onerousness between Section 62 of the Punjab Vat Act and Section 35F of the Central Excise Act. Besides, object, incidence of duty and scheme of law of the two Acts are different - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon ble President to refer the matter to the third member. Matter placed before Hon ble President.
Issues Involved:
1. Whether the Tribunal has inherent power to grant interim protection against the imposition of mandatory pre-deposit 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 Argument by Respondent: The respondent argued that the applications for pre-deposit are not maintainable due to the mandatory nature of section 35F of the Central Excise Act, 1944, which requires pre-deposit for appeals filed after 6.8.2014. They cited decisions from various High Courts, including Ganesh Yadav vs. Union of India and Pioneer Corporation vs. Union of India, to support their stance. Argument by Applicant: The applicant cited the decision in Super Threading (India) Pvt. Ltd. vs. Union of India, where the Punjab & Haryana High Court granted interim relief against the mandatory pre-deposit requirement. They also referenced the case of Punjab State Power Corporation Ltd. vs. State of Punjab, where the High Court held that appellate authorities have inherent power to grant interim protection against mandatory pre-deposit conditions. Tribunal’s Analysis: The Tribunal noted that the interim order in Super Threading (India) Pvt. Ltd. was complied with and thus binding. They also found that the Punjab VAT Act and the Central Excise Act are pari materia, meaning similar in substance. The Tribunal emphasized that the inherent power to grant interim protection is embedded in the appellate authority, as per the Punjab State Power Corporation case. Conclusion: The Tribunal held that it has inherent power to grant interim protection against the imposition of mandatory pre-deposit for hearing the appeal on merits under section 35F of the Central Excise Act, 1944. Issue No. 2: Prima Facie Case for Waiver of Pre-deposit Argument by Respondent: The respondent argued that the applicants must make a mandatory pre-deposit as per section 35F of the Act. They cited the Supreme Court’s decision in Ganesh Trading, which held that paddy converted into rice is a manufactured item, thus excisable. Argument by Applicant: The applicant argued that in their Karnal unit case, the Tribunal held that converting paddy into rice does not amount to manufacture. This decision was based on the Supreme Court’s ruling that paddy and rice remain in their natural form even after dehusking. They claimed a strong prima facie case for waiver of pre-deposit due to financial hardship. Tribunal’s Analysis: The Tribunal noted that the decision in the applicant's Karnal unit case, which held that de-husking paddy into rice is not a manufacturing activity, was not stayed by any higher court. They found that the applicant has a strong prima facie case for waiver of pre-deposit based on this precedent. Conclusion: The Tribunal concluded that the applicants have a prima facie case for waiver of pre-deposit. Final Decision: The Tribunal waived the requirement of pre-deposit of the entire amount of duty, interest, and penalties and stayed the recovery thereof during the pendency of the appeals. They directed the Registry to list the appeals for final disposal, considering the significant revenue involved. Separate Judgment: A separate judgment by the Technical Member disagreed with the above conclusions, emphasizing that the interim order in Super Threading (India) Pvt. Ltd. is not a binding precedent and that the amended section 35F applies to all appeals filed after 6.8.2014. This member held that the Tribunal does not have inherent powers to waive the mandatory pre-deposit requirement. Points of Difference Referred to the President: 1. Whether the interim order in Super Threading (India) Pvt. Ltd. is a binding precedent. 2. Whether judgments of various High Courts on the same issue under the Central Excise Act are applicable. 3. Whether the Tribunal has inherent powers to grant interim protection against mandatory pre-deposit conditions.
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