Pomsy Food Products (P) Ltd. v. Commissioner of Central Excise, Customs and Service Tax Appeals, Cochin

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** ## **&** ## **THE HONOURABLE MR.JUSTICE BASANT BALAJI** **WEDNESDAY, THE 1[ST] DAY OF DECEMBER 2021 / 10TH AGRAHAYANA,** ## **1943** ## **C.E.APPEAL NO. 49 OF 2018** **(ORDER NO.22978/17 OF CESTAT, SOUTH ZONAL BENCH IN APPEAL - E/21411/2017 DB)** ## **APPELLANT/S:** POMSY FOOD PRODUCTS (P) LTD., K.S.PURAM, VAVVAKAVU P.O, OCHIRA, KOLLAM, KERALA BY ADV KARUNAKARAN C.K. ## **RESPONDENT/S:** COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX APPEALS, CR BUILDINGS, I.S. PRESS ROAD, COCHIN -682 018 BY ADV SREELAL N.WARRIER THIS CENTRAL EXICISE APPEAL HAVING COME UP FOR ADMISSION ON 01.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **C.E.APPEAL NO.49 OF 2018** -2- ## **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## **C.E.APPEAL NO. 49 OF 2018** - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## **JUDGMENT** (Dated this the 1[st] day of December 2021) Basant Balaji J., The appellant, a private limited company, challenges the order dated 8.12.2017 of the CESTAT, South Zonal Bench, Bangalore in appeal No.E/21411/2017 – DB. 2. The appellant is a company incorporated under the provisions of the Company Act, 1956 manufacturing biscuits. The Additional Commissioner, Central Excise, Customs and Service Tax passed an order dated 19.3.2014 whereby penalty was imposed on the appellant under various sections of the Central Excise Act, 1944. (for short 'the Act'). The appellant challenged the said order before the Commissioner of Central Excise (Appeals). The Commissioner, after perusing the memorandum of appeal and hearing the counsel, rejected the appeal as per order ## **C.E.APPEAL NO.49 OF 2018** -3- dated 28.5.2015. 3. Aggrieved by the order of the Commissioner of Central Excise (Appeals), the appellant preferred appeal before the CESTAT. The CESTAT by order dated 8.12.2017, dismissed the appeal as the appellant has not complied with the mandate of pre-deposit under Section 35-F of the Act. The said order is under challenge. 4. The short question to be considered in this appeal is whether the appeal can be entertained by the CESTAT without complying with the mandate of pre-deposit under Section 35-F of the Act. 5. The counsel for the appellant submitted that the original order was passed on 19.3.2014 and the insertion of Section 35-F was done with effect from 6.8.2014. So the _lis_ has commenced prior to that amendment and in that situation he cannot be compelled to make deposit under Section 35F of the Act. His further case is that the appeal filed against the original order was also on 17.6.2014 before the amendment and he is not bound to make deposit ## **C.E.APPEAL NO.49 OF 2018** -4- as it was prior to 6.8.2014. 6. The counsel relied on the 2[nd] proviso to Section 35- F of the Act: “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.” 7. The counsel for the respondent Revenue, on the other hand, submitted that Section 35-F is introduced by Act 25 of 2014 and in order to maintain an appeal, the predeposit as stated in the sub-clauses is to be mandatorily complied with. According to him, since the pre-deposit is not made by the appellant, the rejection of appeal by the appellate authorities is in order and requires no interference by this Court. 8. Section 35-F of the Act reads as follows:- ## “ **35-F. Deposit of certain percentage of duty** ## **C.E.APPEAL NO.49 OF 2018** -5- **demanded or penalty imposed before filing 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 35-B, 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 35-B, 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:” 9. As per sub-clause (1) to Section 35-F, it is made ## **C.E.APPEAL NO.49 OF 2018** mandatory that the Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal if the appellant has not deposited 7½ per cent of the duty demanded or 10% of the duty, as the case may be. If the deposit is not made by the appellant as mandated in the said section, the Commissioner or the Tribunal is justified in dismissing the same in limine. In this case,, admittedly, the appellant has not remitted the pre-deposit as stated in Section 35-F of the Act. 10. The counsel for the appellant has made one more submission that the Registry of the Tribunal has not raised any objection as regards the pre-deposit when the appeal memorandum was scrutinised and in that case, if the appellate Tribunal is of the opinion that mandatory deposit is not made by the appellant, the appellant should have given an opportunity to pay the required pre-deposit, which was not done by the Tribunal. On going through the order of CESTAT, it can be seen that at the time of hearing of the Miscellaneous Application for condonation of delay, it was ## **C.E.APPEAL NO.49 OF 2018** -7- found that there was no proof of mandatory pre-deposit and the appeal was dismissed for non-compliance of Section 35-F of the Act. 11. The Hon'ble High Court of Allahabad had gone through this issue in **Ganesh Yadav v. Union of India [(2015) 59 taxmann.com 447 (Allahabad)]** , wherein it was held as follows: “22. For these reasons, we hold that the petitioner would not be justified in urging that the amended provisions of Section 35F(1) of the Act would not apply merely on the ground that the notice to show cause was issued prior to the enforcement of Finance (No.2) Act, 2014. We find no merit in the constitutional challenge. The petition shall accordingly stand dismissed for the aforesaid reasons.” ## **C.E.APPEAL NO.49 OF 2018** -8- 12. In the above decision, the Hon'ble High Court of Allahabad has taken a view that even if the show cause notice was issued prior to the enforcement of the Finance Act 2014, the provision of Section 35-F(1) of the Act would not apply. We are in agreement with the view taken by the Hon'ble High Court of Allahabad. 13. The CESTAT had dismissed the appeal for failure on the part of the appellants in making mandatory deposit. The said order is on technical grounds. The merits of the case projected by the appellants were never gone into. In that view of the matter, we feel that an opportunity can be granted to the appellant to make pre-deposit as mandated under Section 35-F of the Act, so that the CESTAT would be in a position to entertain the appeal and to go into the merits of the case of the appellant. 14. We are of the view that even though we sustain the order of the CESTAT, the appellant is granted three months time from today to comply with the condition of payment as mandated under Section 35F of the Act. The ## **C.E.APPEAL NO.49 OF 2018** -9- appellant shall produce the judgment of this court while making the pre-deposit. In such a case, the CESTAST is directed to dispose of the appeal on merits, as expeditiously as possible and at any rate within six months thereafter. Accordingly, we order so. With the said observations, this Central Excise Appeal is disposed of. **sd/ S.V.BHATTI, JUDGE sd/BASANT BALAJI, JUDGE** _dl/_ ## **C.E.APPEAL NO.49 OF 2018** -10- ## **APPENDIX OF C.E.APPEAL 49/2018** PETITIONER ANNEXURE ANNEXURE P1 CERTIFIED COPY OF ORDER DATED 08.12.2017 IN APPEAL E/21835/2015-DB. ANNEXURE P2 TRUE COPY OF ORDER IN ORIGINAL NOS. 01,02 & 03 DATED 19.03.2014 ANNEXURE P3 TRUE COPY OF THE MEMORANDUM OF 1ST APPEAL DATED 17.06.2014 ANNEXURE P3 TRUE COPY OF ORDER DATED 28.05.2015 IN 1ST APPEAL. ANNEXURE P4 TRUE COPY OF APPEAL MEMORANDUM STAY PETITION AND APPLICATION FOR WAIVING PRE-DEPOSIT BEFORE THE APPELLATE TRIBUNAL