M/s Iceberg Foods Ltd And Others vs C.CE & S.T Rohtak

S.S. Garg, Member (J)

In the present case, Registry has raised the preliminary objection that the appellant has not made the pre-deposit as required Section 35F of Central Excise Act, 1944 readwith Section 83 of the Finance Act, 1994.

On this preliminary objection, the Ld. Counsel for the appellant submitted that the appellant may be allowed to file the appeal without insistence by the registry to deposit mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 readwith Section 83 of the Finance Act, 1994. He further submitted that the appellant has vested right of appeal which cannot be defeated by putting fetters of mandatory pre-deposit. He also submitted that this Tribunal has the power to condone the mandatory condition of pre-deposit to entertain the appeal.

Ld. Counsel further submitted that the appellant is facing financial crisis and not in a position to comply with the mandatory requirement of Section 35F of the Central Excise Act, 1944 readwith Section 83 of the Finance Act, 1994.

On the other hand, the Ld. DR submitted that as per the provision of Section 35F as amended w.e.f. 06.08.2014, the Tribunal is barred to entertain the appeal without compliance of mandatory pre-deposit as prescribed in Section 35F of Central Excise Act, 1944. He further submitted that the only exception is as provided in proviso to Section 35F which clearly indicates that the requirement of mandatory pre-deposit shall not apply to stay applications and appeals which were pending prior to 06.08.2014. He further submitted that this issue has been considered by the Tribunal, and various High Courts and the Hon’ble Apex Court from time to time and has taken the consistent view that the amendment in Section 35F insisting mandatory pre-deposit w.e.f. 06.08.2014 is reasonable condition and in no way effects the vested right of the appeal. Ld. DR in support of his submission, relied upon the following decisions:-

Ø  Dunar Foods Ltd. vs. Commissioner of Central Excise, Ludhiana 2018 (363) ELT 584 (Tr.-Chan.)

Ø  G.D. Goenka World Institute vs. UOI 2019 (368) ELT 67 (P & H)

Ø  Dream Castle vs. UOI 2016 (43) STR 25 (Mad.)

Ø  Nimbus Communications Limited vs. Commissioner of Service Tax, Mumbai-IV 2016 (44) STR 578 (Bom.)

After considering the submissions of both the parties and perusal of the material on record and the precedent decisions relied upon by both the parties, we find that this issue is no more res-integra and has been settled by the Larger Bench of the Tribunal as

well as by the Hon’ble High Court of Bombay and Hon’ble High Court of Madras as well as Hon’ble Punjab and Haryana High Court. Here, it is pertinent to refer to the relevant paras of the judgements rendered by the Hon’ble High Courts.

The jurisdictional High Court in the case of G.D. Goenka World Institute cited (supra) has held in Para 19 which is as under:-

“19. To our minds, there would be no escape from pre-deposit as the Tribunal lacks the power to entertain the appeal without it. If we have to lend any other interpretation, it would defeat the legislative intent which is so clearly visible from the provisions of Section 35F of the Act and in fact, there would have been no necessity of amendment and Section 129E in its unamended form need not have been tinkered with. In conclusion, the said vires have already been upheld (and in fact, Learned Counsel for the petitioner also candidly concedes to it) the only question which was left for us to determine is of an inherent discretion with the Tribunal to entertain an appeal without pre-deposit which we have for the aforesaid reasons held to be a course not available to it.”

The Hon’ble High Court in this case has also approved the decision of the Larger Bench of the Tribunal in the case of Dunar Foods Ltd. cited (supra) wherein the Tribunal by majority decision has held in Para 48 which is as under:-

“48. In view of the majority decision, the applicant is directed to make mandatory pre-deposit in terms of Section 35F of Central Excise Act, 1944 within a period of four weeks and to report compliance on 8-1-2018.”

Further, the Hon’ble High Court of Bombay in the case of Nimbus Communications Limited cited (supra) has considered the constitutionality of the provision of Section 35F after amendment and after analyzing the decision of other High Courts has held in Para 22 to 25 which are reproduced herein below:-

“22. The view taken by the Division Bench of the High Court of Madras in Dream Castle (supra), with respect, is also in consonance with the statutory prescription and the intent. It has referred to all the decisions in the field and the rival contentions. The Division Bench of the Allahabad High Court and all other judgments, including of the Kerala High Court have been extensively referred to. The independent reasoning of the Division Bench of the High Court of Madras is, with respect, rightly construing and interpreting the statutory provision. As held by the Division Bench of the High Court of Madras, the substantive provision Section 35F after its amendment, is not capable of any other interpretation. Though the second proviso was referred, but the Division Bench independent thereof, agreed with the contention of the Revenue which is that the amended provision would have to be applied to all such appeals as falling within the second proviso.

We also arrive at the same conclusion and, therefore, it is not necessary for us to reproduce each and every paragraph from the judgment of the High Court of Madras. Once we broadly agree with Ms. Cardozo that the prescription as is carved out by Section 35F would apply to all such appeals and stay applications as are referred to in the second proviso, then, it is not possible to agree with the appellant’s Senior Counsel. More so, when the order-in-original was challenged in appeal which is filed in this case after 6th August, 2014, and the stay application was also after this date. Hence, the amended section is rightly applied to the above undisputed factual position.

We do not think that any provision of the nature pointed out in this appeal defeats or renders the vested right of appeal illusory. A very reasonable condition has been imposed and that, to our mind, in no way affects the vested right of appeal.”

25.For the aforesaid reasons, we agree with the view taken by the Tribunal. We dismiss the appeal. There will be no order as to costs.

Similarly, the division bench of the Hon’ble Madras High Court in the case of Dream Castle cited (supra) has held in Para 54 which is as under:-

“54. Therefore, it is well settled that the right of appeal is a creature of statute and the legislature is well within its competence to impose conditions for the exercise of such a right subject only to the restriction that the conditions so imposed are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory.”

Further, we find that the decisions relied upon by the appellant cited in the written submission filed by the Ld. Counsel are on merit and not under Section 35F of the Act, 199435F read with Section 83 of the Finance Act, 1994.

In view of our discussion above, we are of the considered opinion that the appellant has to comply with the mandatory pre-deposit. Since, in the present case, the appellant has not complied with the condition of mandatory pre-deposit as required under Section 35F read with Section 83 of the Finance Act, 1994, hence, his appeals cannot be entertained and the same is hereby dismissed for non compliance of condition of mandatory pre-deposit as required under Section 35F read with Section 83 of the Finance Act, 1994.