2024 (10) TMI 721 - AT - Central Excise

Maintainability of petiiton - non-compliance of the statutory requirement of pre-deposit - power of the Tribunal or the Commissioner (Appeals) to waive the pre-deposit requirement - HELD THAT - It would be seen from a bare perusal of section 35F of the Central Excise that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 35F on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others 2011 (3) TMI 1478 - SUPREME COURT , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statute confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. It will also be appropriate to refer to a decision of the Delhi High Court in Dish TV India Limited vs. Union of India Ors. 2020 (8) TMI 183 - DELHI HIGH COURT , wherein the requirement of pre-deposit under section 129E of the Customs Act, came up for consideration. The High Court held that when the Statute itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive this requirement of deposit. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court and the Delhi High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Appeal dismissed.

Issues Involved:

1. Compliance with the statutory requirement of pre-deposit under Section 35F of the Central Excise Act.
2. The power of the Tribunal or the Commissioner (Appeals) to waive the pre-deposit requirement.
3. Judicial precedents concerning the mandatory nature of pre-deposit requirements.

Detailed Analysis:

1. Compliance with the Statutory Requirement of Pre-Deposit:

The primary issue in this case was the appellant's failure to comply with the statutory requirement of pre-deposit as mandated by Section 35F of the Central Excise Act, which applies to service tax by virtue of Section 83 of the Finance Act. The provision requires appellants to deposit a certain percentage of the duty or penalty before filing an appeal. Specifically, the appellant must deposit 7.5% of the duty or penalty in dispute for appeals under Section 35, and 10% for appeals under certain clauses of Section 35B. The amount required for pre-deposit is capped at ten crores. The appellant admitted its inability to make the pre-deposit, which is a mandatory condition precedent for maintaining the appeal.

2. Power to Waive the Pre-Deposit Requirement:

Prior to the amendment on August 6, 2014, the Tribunal had the discretion to waive the pre-deposit requirement if it was deemed to cause undue hardship, subject to conditions safeguarding the revenue's interest. However, post-amendment, this discretion was removed, and neither the Tribunal nor the Commissioner (Appeals) can waive the pre-deposit requirement. This reflects a legislative intent to make the pre-deposit a non-negotiable prerequisite for entertaining appeals.

3. Judicial Precedents on the Mandatory Nature of Pre-Deposit:

The judgment extensively refers to various judicial precedents reinforcing the mandatory nature of the pre-deposit requirement. The Supreme Court in "Narayan Chandra Ghosh vs. UCO Bank and Others" held that statutory conditions for appeal, like pre-deposit, must be fulfilled as they are conditions precedent. The Court emphasized that no appeal could be entertained without meeting these conditions, and the Tribunal cannot grant a waiver beyond what the statute permits.

Further, in "Chandra Sekhar Jha vs. Union of India and Another," the Supreme Court reiterated that the new regime reduced the pre-deposit requirement but removed the discretion to waive it, emphasizing the legislative intent to enforce this requirement strictly.

The Delhi High Court in "Dish TV India Limited vs. Union of India & Ors." and "M/s Vish Wind Infrastructure LLP v/s Additional Director General (Adjudication), New Delhi" echoed similar sentiments, stressing that courts cannot waive statutory requirements that are explicitly clear and unambiguous. The High Court noted that allowing appeals without the mandatory pre-deposit would contravene legislative intent and reduce statutory commands to a dead letter.

The Madhya Pradesh High Court in "Ankit Mehta v/s Commissioner, CGST Indore" also upheld the mandatory nature of the pre-deposit, dismissing appeals where the appellant failed to comply due to financial constraints. The Court emphasized that neither the Tribunal nor the courts have the authority to waive or reduce the pre-deposit requirements under Section 129E of the Customs Act.

Conclusion:

The appeal was dismissed due to the appellant's failure to make the mandatory pre-deposit. The Tribunal upheld the statutory requirement of pre-deposit as a condition precedent for maintaining an appeal, aligning with the consistent judicial interpretation that emphasizes the non-negotiable nature of such statutory conditions.

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