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TMI Blog2018 (6) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute is mandated - Section 35F of the C.E. Act should not be construed by adding or substituting words to clarify and ironout assumed doubts. Intent as cogently reflected in simple words is that the assessee on second appeal should pre-deposit 10% of the total tax and penalty subject matter of the appeal. It is not to ignore the pre-deposit of 7.5% already made to file first appeal. There is logic in increasing pre-deposit by 2.5% when second appeal is filed, but we would be adding words to the plain and unambiguous provision if we stipulate that 10% pre-deposit will be over and above 7.5% pre-deposit made at the time of the first appeal - Deposits made during the pendency of the proceedings, or even after the order-in-original is passed, have to be taken into consideration for determining and deciding whether condition of pre-deposit of 7.5% or 10% has been satisfied. Earlier deposits do not get obliterated and are not to be treated as inconsequential. Equally pertinent is the second sentence in paragraph 3.1, which states that any shortfall from the amount stipulated in the Section shall have to be paid before filing of an appeal before the appellate authority. Inapplicabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 issued by the Tribunal, based on the larger Bench decision of the Tribunal in In Re: Quantum of Mandatory Deposit, reported as 2017 (349) ELT 477 (Tri.-LB), stipulating that while preferring an appeal against an order of Commissioner (Appeals), the appellants are required to deposit 10% of the amount of duty and penalty imposed and confirmed separately and over and above pre-deposit of 7.5% for filing first appeal before Commissioner (Appeals). 4. Second contention of the petitioner is that requirement of pre-deposit mandated vide Section 35F of the C.E. Act, does not apply to service tax appeals preferred under Sections 85 and 86 of the Finance Act, 1994. 5. In view of the limited controversy and question for consideration, we need not refer to the factual matrix in detail, except notice that the writ petitioner - M/s Santani Sales Organisation has preferred second appeals bearing Nos. ST 52898/2016 and ST 50372/2017 before the Tribunal against the orders passed in the first appeal by the Commissioner (Appeals). Disputed duty demand including Education and Secondary and Higher Education Cess confirmed by Commissioner (Appeals) under challenge in Appeal No. ST 52898/2016 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. Explanation.- For the purposes of this section duty demanded shall include,- (i) Amount determined under section 11D; (ii) Amount of erroneous Cenvat credit taken; (iii) Amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004. Section 35F requires mandatory deposit of specified percentage of duty demanded or penalty imposed before filing an appeal and stipulates that the Tribunal or Commissioner (Appeals) shall not entertain any appeal, unless pre-deposit of 7.5% or 10%, as the case may be, has been made. The said provisions are not applicable to stay applications or appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, in its discretion, refuse to admit an appeal in respect of an order referred to in clause (b) or clause (c) or clause (d) where (i) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; (ii) the amount of fine or penalty determined by such order, does not exceed Two lakh rupees; 9. As per clause (a) to Section 35B (1), any person aggrieved by an order or decision of the Principal Commissioner of Central Excise or Commissioner of Central Excise as the adjudicating authority, can file an appeal before the Tribunal. In terms of clause (ii) of Section 35F, the appellant, while filing an appeal against order referred to in clause (a) of sub-section (1) of Section 35B, is required to deposit 7.5% of the duty, or duty and penalty, or penalty, which is in dispute. 10. As per clause (b) to sub-section (1) of Section 35B, an assessee can also file an appeal before the Tribunal against an order passed by the Commissioner (Appeals), which is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or before the Commissioner (Appeals), 7.5% of the duty and penalty in dispute must be deposited. In case of second appeal before the Tribunal, the amount gets enhanced from 7.5% to 10%. 13. An appeal, whether first or second, is continuation of original proceedings. Further, appeal being a substantive right created by the statute can be circumscribed by the conditions imposed by the Legislature, including condition of pre-deposit. However, there are rulings that condition of pre-deposit should not be so onerous and harsh so as to amount to an unreasonable restriction, thereby rendering and making the right of appeal illusory and delusive [See Seth Nand Lal And Another Vs. State of Haryana And Others AIR 1980 SC 2097 and Mardia Chemicals Ltd. And Others Vs. Union of India And Others (2004) 4 SC 311]. In Law and practice appeals are remedial right of critical importance because it empowers the superior forum or court to come to the aid and redress error and mistakes of the authority or courts below (See Sita Ram And Others Vs. State of Uttar Pradesh AIR 1979 SC 745). Appellate Courts and Tribunals in accord and in terms of the discretion vested by the statute and depending on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch suggests that a heavy price tag on relief in Court should be regarded as unpalatable. (emphasis supplied) These decisions relate to interpretation of Statutes imposing court fees and taxing enactments on charging provisions in general. Charging provision of the taxing law must be strictly construed. In taxing enactment one should normally look at what is said in the provision, without reading anything into it impliedly or on the basis of presumption, for there is no room for any intendment [Federation of A.P. Chambers of Commerce of Industry Vs. State of A.P, (2001) 247 ITR 36 (SC)]. We would keep the said principles in mind while interpreting the provisions of law relating to pre-deposit which curtails the right to appeal. 15. Language of Section 35F of the C.E. Act is unchallenging and meaning of words and conditions placed is plain and lucid. Requirement is to pre-deposit 7.5% of the duty and penalty in dispute; and in case of the second appeal pre-deposit of 10% of the duty and penalty in dispute is mandated. We say so because of syntactic and adverbial clarity which is apparent. The provision suffers from no ambiguity and is not open to diverse interpretations. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not indicate what is in the mind of the law makers enacting while the provisions of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962. Be that as it may, we find that the said provisions of pre-depositing an amount for preferring 1st appeal against the adjudication order needs to be done so, at the rate of 7.5% of the duty confirmed or the penalty imposed as the case may be. This would mean that the first appeal can be entertained only deposit of such an amount and on conclusion of the proceedings, he has option to go further in appeal before first appellate authority or if the appeal is disposed of, amount pre-deposited by him which is equivalent to 7.5% of the duty confirmed or penalty imposed as the case may be, needs to be refunded in accordance with law. 6.2 As regards the second appeal preferred against the first appellate authority‟s order, the quantum of pre-deposit has been set at 10% instead of 7.5% of the duty confirmed or penalty imposed. In our view both the appellate proceedings i.e. before the first appellate authority and before the Tribunal, it is to be treated as an independent provisions then deposits as mandated n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a decision of the Principal Bench of the Tribunal dated 27th March, 2015 in the case of M/s Balajee Structural (India) Private Limited versus CCE, Raipur, Interim Order No. IO/14/2015-[CR], holding that if the appellant had deposited 10% of the duty confirmed before preferring the appeal before the Tribunal, there would be sufficient compliance of the provision for mandatory deposit. The decision does not support the stand and stance of the Revenue. 18. However, similar view in favour of the Revenue was expressed by the Tribunal, Eastern Zonal Bench, Kolkata in Hindalco Industries Limited and Others versus Commissioner of Central Excise, Kolkata-II, 2016-TIOL-3050-CESTAT-KOL. The reasoning given by the Tribunal in this case, which is in paragraph 4.2, is rather interesting and reads as under:- 4.2 It is observed from the case records that neither Section 35F(iii) of the Central Excise Act, 1944 nor CBEC Circular dated 16.09.2014 specifically mention whether 10% deposit required before appeal is entertained should be inclusive or exclusive of 7.5% deposit made before the first appellate authority. It is a well known fact that success rate of departmental cases before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mandatory Deposit (supra). Paragraphs 2 and 3 of the said Circular read as under:- 2. Quantum of pre-deposit in terms of Section 35F of Central Excise Act, 1944 and Section 129E of the Customs Act, 1962: 2.1 Doubts have been expressed with regard to the amount to be deposited in terms of the amended provisions while filing appeal against the order of Commissioner (Appeals) before the CESTAT. Sub-section (iii) of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 stipulate payment of 10% of the duty or penalty payable in pursuance of the decision or order being appealed against i.e. the order of Commissioner (Appeal). It is, therefore, clarified that in the event of appeal against the order of Commissioner (Appeal) before the Tribunal, 10% is to be paid on the amount of duty demanded or penalty imposed by the Commissioner (Appeal). This need not be the same as the amount of duty demanded or penalty imposed in the Order-in-Original in the said case. 2.2 In a case, where penalty alone is in dispute and penalties have been imposed under different provisions of the Act, the pre-deposit would be calculated based on the aggregate of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. This is relevant. Deposits made during the pendency of the proceedings, or even after the order-in-original is passed, have to be taken into consideration for determining and deciding whether condition of pre-deposit of 7.5% or 10% has been satisfied. Earlier deposits do not get obliterated and are not to be treated as inconsequential. Equally pertinent is the second sentence in paragraph 3.1, which states that any shortfall from the amount stipulated in the Section shall have to be paid before filing of an appeal before the appellate authority. 21. Second contention of the petitioner relating to inapplicability of section 35F of the C.E. Act, i.e. Central Excise Act, to appeals preferred before the Tribunal under Section 86 of the Finance Act, is however, without merit and has to be rejected. Sections 83, 85 and 86 of the Finance Act, as they presently are, read as under: 83. Application of certain provisions of Act 1 of 1944.-The provisions of the following sections of the Central Excises Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise:- [sub-section (2-A) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise (Appeals) shall exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944. 86. Appeals to Appellate Tribunal.-(1) Save as otherwise provided herein, an assessee aggrieved by an order passed by a Commissioner of Central Excise under Section 73 or Section 83-A xxx, or an order passed by a Commissioner of Central Excise (Appeals) under Section 85, may appeal to the Appellate Tribunal against such order within three months of the date of receipt of the order: Provided that where an order, relating to a service which is exported, has been passed under Section 85 and the matter relates to grant of rebate of service tax on input services, or rebate of duty paid on inputs, used in providing such service, such order shall be dealt with in accordance with the provisions of Section 35-EE of the Central Excise Act, 1944: Provided further that all appeals filed before the Appellate Tribunal in respect of matters covered under the first proviso, after the coming into force of the Finance Act, 2012 and pending before it up to the date on which the Finance Bill, 2015 receives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commissioners or, as the case may be, the Committee of Commissioners. (4) The Commissioner of Central Excise or [any Central Excise Officer subordinate to him or the assessee, as the case may be, on receipt of a notice that an appeal against the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals) has been preferred under sub-section (1) or sub-section (2) or sub-section (2-A) by the other party may, notwithstanding that he may not have appealed against such order or any part thereof, within forty-five days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3). (5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in [sub-section (1) or sub-section (3)] or sub-section (4) if it is satisfied that there was sufficient cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to duty of excise in Section 83 of the Finance Act with reference to the stated provisions of the C.E. Act, clearly reflects and clinches the issue that the legislature wanted subsequent amendments in the enumerated sections of the C.E. Act, would equally apply to service tax. This is the case of reference or citation of one or more sections into other statute and not reference by incorporation. Sometimes distinction between incorporation by reference and adoption of provisions by mere reference or citation is difficult to draw, but in the present case in view of the clear legislative mandate and the language used in Section 83 of the Finance Act, this difficulty does not arise. We, therefore, need not expound and refer to the said distinction in detail in the present case. Contention of the petitioner that Section 35F of the C.E. Act, has undergone drastic amendments w.e.f. 6th August, 2014 and the new stipulations in Section 35F of the C.E. Act are completely different, whereas reference under Section 83 of the Finance Act to Section 35F of the C.E. Act was with reference to earlier Section 35F, consequently fails and has to be rejected. As already indicated above, this is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that Act confers a jurisdiction to an established court, as distinguished from a persona designata, without any words of limitation then, the ordinary incident of procedure of that court including any general right of appeal or revision against its decision is attracted. 22. But an exception to the aforementioned rule is on matters where the special Act sets of it a self-contained Code the applicability of the general law procedure would be impliedly excluded. (See Upadhyaya Hargovind Devshanker v. Dhirendrasinh Virbhadrasinnhji Solanki). (emphasis supplied) 23. Section 86 of the Finance Act provides for an appeal before the Tribunal and Section 83 of the Finance Act makes Section 35F of the C.E. Act equally applicable. Section 35F of the C.E. Act is the provision which relate to pre-deposit, a mandatory provision for the appeal to be maintainable and heard. If the interpretation given by petitioner is accepted we would be rendering a part of Section 83 of the Finance Act referring to Section 35F of the C.E. Act altogether otiose and redundant. Decision is Glyph International Limited (supra) is in different context of right to appeal before the Tribunal given v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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