Gurnomal Matta (Name Deleted As Per C.O. Dtd. 07/05/2025) vs. Custom Execise And Service Tax

Held

The Court held that the condition of pre-deposit for entertaining an appeal, as stipulated under Section 35B of the Central Excise Act, 1944 (and related provisions like Section 129E), is mandatory and cannot be waived or relaxed by the appellate authorities or by the High Court in its writ jurisdiction under Article 226. The Court relied on several High Court judgments (Rahul Rajvaidhya, M/s Shree Marwal Sewashram, Ankit Mehta, Pioneer Corporation, Anjani Technoplast Ltd.) and a Supreme Court judgment (Chandra Sekhar Jha v/s Union of India) which affirmed that the pre-deposit requirement is statutory and not discretionary. The Supreme Court in Chandra Sekhar Jha clarified that Section 129E, even as substituted, does not empower waiver. Therefore, the dismissal of the petitioners' earlier appeal by the appellate authority due to non-fulfillment of the pre-deposit requirement was found to be correct. The writ petition was dismissed.

Facts

The petitioners, proprietors of M/s Hari Om Traders, were issued a show cause notice dated 04.07.2018 by Respondent No.2, the Commissioner, Central Excise Service Tax and Central Excise, following a search on 13.07.2015. An order dated 30.08.2019 demanded Rs. 8891.14 Lacs as excise duty, along with interest and a penalty of Rs. 8891.14 Lacs, and a further penalty of Rs. 50 Lacs. Aggrieved, the petitioners filed an appeal under Section 35B of the Central Excise Act, 1944, but it was dismissed on 09.02.2021 for non-deposit of the statutory amount. A subsequent appeal (CEA No. 14/2021) was withdrawn on 29.10.2021 with liberty to file appropriate proceedings. The petitioners then filed the present writ petition seeking a direction to waive the pre-deposit condition for their appeal. Petitioner No.1 expired during the pendency of the petition and his name was deleted.

Key Issues

1. Whether the condition of pre-deposit of the statutory amount for entertaining an appeal can be relaxed in exercise of the powers under Article 226 of the Constitution of India, particularly in light of Section 35B of the Central Excise Act, 1944 and related precedents. Petitioner's contention: The petitioners sought a direction to waive the mandatory pre-deposit condition, citing their poor financial condition in affidavits for the years 2016-17 and 2020-21, implicitly arguing for relaxation based on hardship. Respondent's contention: The respondents sought dismissal of the writ petition, reserving the right to file a detailed reply. The judgment indicates no specific argument was recorded for the respondents beyond seeking dismissal.