M/S. Niranjan Khuntia, Paradeep vs. Union Of INDIA
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The petitioner's appeal before the Commissioner (Appeals) was dismissed for non-payment of the mandatory pre-deposit. The petitioner claimed to have made substantial deposits during adjudication, which they argued should be considered towards the pre-deposit requirement.
Held
The Court held that the appellate authority failed to consider the payments made by the petitioner during adjudication and the relevant circular of the Central Board of Excise and Customs. The impugned order was set aside for reconsideration.
Key Issues
Whether payments made during adjudication can be considered as fulfilling the pre-deposit requirement under Section 35F, and if the appellate authority properly considered relevant circulars in this regard.
Sections Cited
Section 35F
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Cause title — parties, addresses and appearances
ORDER 24.01.2023
The challenge in the present case is to an order 6th April 2022 passed by the Commissioner (Appeals), GST, Central Excise & Customs, Bhubaneswar dismissing the Petitioner’s Appeal No.92/ST/BBSR-GST/2018 which in turn was directed against an Order-in-Original dated 15th January 2018 of the Joint Commissioner of CGST & Central Excise, Bhubaneswar.
The appeal has been dismissed only on the ground that the mandatory pre-deposit of 7.5% of the duty demanded had not been paid as mandated under Section 35F of the Central Excise Act, 1944 (Act). In other words, the appeal was rejected not on merits, but on account of failure to make the pre-deposit.
In the appeal memo filed before the aforementioned appellate authority, the Petitioner had stated that a sum of Rs.19,07,445/- had been deposited during the pendency of the adjudication through e- payment enclosing the copies of the e-payment challans. This apparently was not taken note by the 1st Appellate Authority while examining whether the Petitioner had made payment of 7.5% of the disputed duty amount along with interest and penalty of Rs.95,96,680/-.
The appellate authority have also appears not to have taken note of circular No.984/08/2014-CX dated 16th September 2014 issued by the Central Board of Excise and Customs where in Clause-3, it is stated as under:
“3. Payment made during investigation:
1 Payment made during the course of investigation or audit, prior to the date on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of Rs.10 crores, can be considered to be deposit made towards fulfillment of stipulation under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962. Any shortfall from the amount stipulated under these sections shall have to be paid before filing of appeal before the appellate authority. As a corollary, amounts paid over and above the amounts stipulated under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962, shall not be treated as deposit under the said sections.
2 Since the amount paid during investigation/audit takes the colour of deposit under Section 35F of the Central Excise Act, 1944 or Section 129 E of the Customs Act, 1962 only when the appeal is filed, the date of filing of appeal shall be deemed to be the date of deposit made in terms of the said sections.
3 In case of any short-payment or non-payment of the amount stipulated under Section 35F of the Central Excise Act, 1944 or Section 129 E of the Customs Act, 1962, the appeal filed by the appellant is liable for rejection.”
It is thus seen that the aforementioned paid by the Petitioner had to be accounted for by the Appellate Authority while determining the question whether the Petitioner had satisfied the requirement of making of pre-deposit in terms of Section 35F of the Act, 1944. 6. Inasmuch as the above circular has not been taken note of the by the 1st Appellate Authority in passing the impugned order, this Court sets aside the impugned order and remands Petitioner’s appeal to the Commissioner (Appeals) for being decided afresh in accordance with law. If in terms of the circular dated 16th September 2014, the Petitioner has already made the pre-deposit of 7.5% of the duty demanded including interest, then the Commissioner (Appeals) will proceed with hearing the appeal on merits and pass an appropriate order in accordance with law. The Petitioner’s Appeal No.92/ST/BBSR-GST/2018 will now be listed before the Commissioner (Appeals), CGST, Central Excise & Custom, Bhubaneswar on 13th February 2023, on which date the Petitioner will appear along with a downloaded copy of this order. The Commissioner (Appeals) will thereafter proceed in accordance with law and pass a fresh order in the said appeal within a period of four months thereafter.
The writ petition is disposed of in the above terms. Issue urgent certified copy of this order as per rules.
(Dr. S. Muralidhar) Chief Justice
(M.S. Raman) Judge S.K. Guin
Reproduced from the public record of the Orissa High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.