Karan Transport Company vs Commissioner, Central Excise, CGST

The adjudication in the present case began against the appellant based upon the third party information as was received from the Income Tax Department for the year 2012-2013 about the appellants earning the income of Rs.20,30,218/- for providing taxable service but for not paying the service tax amounting to Rs.2,50,935/-. The said amount was accordingly proposed to be recovered vide Show Cause Notice No. 838 dated 25.4.2018. The said proposal was confirmed by Order in Original No. 29/2019-20 dated 13.5.2019. Being aggrieved the appeal was filed before Commissioner (Appeals). However, the said appeal has been rejected for want of deposit of the amount of certain percentage of duty demanded or penalty imposed which was mandatory to be deposited before filing the appeal in terms of section 35F of Central Excise Act, 1944. Being aggrieved the appellant is before this Tribunal.

I have heard Shri Satya Narayan Sethi, learned Counsel for the Appellant and Ms Tamanna Alam, learned Authorised Representative for the Department.

It is mentioned that the appellant was pursuing the matter in person and hence was not aware about the technical mandate of making the payment of certain amount to be called as pre-deposit before filing the appeal before Commissioner (Appeals). It is because of said negligence that the appeal was dismissed without affording an opportunity to the appellant by making good the deficiency. Learned Counsel has requested that the matter be adjudicated on merits. Learned Departmental Representative has expressed no objection in case the appeal is remanded for adjudication on merits subject to the deposit of such amount of pre-deposit by the appellant as requisite for filing the appeal before Commissioner (Appeals).

In view of the said submissions on behalf of the parties to the present appeal and perusing that the Commissioner (Appeals) has rejected the appeal only in terms of section 35F of Central Excise Act, 1944, I hold as follows:

The provision reads as follows:

“Section 35F. Deposit of certain percentage of duty demanded or penalty imposed before filling appeal. –

The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal, -

(i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise;

(ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against;

(iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty demanded or penalty imposed or both, 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.

Perusal makes it apparent and clear that the requirement of this section is mandatory requirement and the failure thereof results in rejection of appeal ‘in limine’. However keeping in view the acknowledgement of the appellant for pursuing this matter to be adjudicated on merits, it is being reasonable in the interest of justice that the matter be remanded back to the Commissioner (Appeals) with the direction to the appellant to make good the absence of payment of amount of mandatory pre deposit prior for the appeal being heard by Commissioner (Appeals). In nutshell the appellant is allowed an opportunity to make the compliance of the section 35F of Central Excise Act, as reproduced above. Commissioner (Appeals) is directed to adjudicate the matter on merits after the aforesaid compliance on the part of the appellant is made.

Resultantly, the appeal in hand accordingly is allowed by way of remand.