M/S Triputi Commodities vs. The Commissioner

Held

The Court held that Section 35F of the Central Excise Act, 1944, as amended by the Finance (No.2) Act, 2014, has removed the discretion of the Tribunal to waive the pre-deposit requirement. The amended Section 35F mandates the deposit of 7.5% of the duty demanded or penalty imposed as a precondition for entertaining an appeal. While the High Court's jurisdiction under Article 226 of the Constitution to grant relief in rare and deserving cases is not taken away, it should not be exercised to override the legislative intent of Section 35F, which aims to safeguard revenue and prevent frivolous litigation. The Court noted that the Delhi High Court in Manoj Kumar Jha (supra) did not consider its earlier judgments in Pioneer Corporation and Suvidha Signs Studios Pvt. Ltd. The appeal, being against an order of the Tribunal and not a writ petition, does not warrant a waiver. However, acknowledging the appellant's deposit of 50% of the pre-deposit amount, the Court directed that if the remaining 50% is deposited within two months, the appeal shall stand revived for decision on merits.

Facts

M/s Triputi Commodities (appellant) filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (Tribunal) against an Order-in-Original dated 11.01.2017. The Tribunal dismissed the appellant's application seeking waiver of the mandatory pre-deposit of 7.5% of the duty demanded for entertaining the appeal. The appellant had initially approached the High Court by way of a writ petition, which was disposed of with a direction to the Tribunal to consider the appellant's financial condition. The appellant then filed the present appeal against the Tribunal's order dismissing its waiver application. The appellant had previously deposited 50% of the pre-deposit amount as per a High Court order dated 06.03.2019.

Key Issues

1. Whether the High Court, in an appeal against an order of the Tribunal dismissing a waiver application, can direct waiver of the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, despite the amended provision making it mandatory. Contentions of the Appellant: The Tribunal wrongly observed that there was no specific direction by the High Court to waive the pre-deposit. The High Court's power under Article 226 of the Constitution to dispense with pre-deposit is not abridged by the amended Section 35F. Reliance was placed on Ganesh Yadav Vs. Union of India and Manoj Kumar Jha Vs. Directorate of Revenue Intelligence. Given the prior deposit of 50%, waiver of the remaining 50% should be granted. The appeal is competent as the Tribunal's order was appellable. Contentions of the Respondent: Post-amendment, Section 35F does not grant discretion to the Tribunal to waive pre-deposit. The amended Section 35F makes pre-deposit a mandatory precondition. Reliance was placed on Kim Steel Strips Pvt. Ltd. & Others Vs. The Commissioner of Central Excise and Customs, Pioneer Corporation Vs. Union of India, Nimbus Communications Limited Vs. Commissioner of Service Tax, and Cyquator Media Services P. Ltd. Vs. Union of India.