M/S Surya Air Products (P) Ltd vs The Union Of India & Others

CWP No.13288 of 2012 1

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Date of Decision: January 15, 2013

CWP No.13288 of 2012

M/s Surya Air Products (P) Ltd. ...

Petitioner

Versus

The Union of India & others ...Respondents

CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI

Present: Mr. Sanjay Bansal, Senior Advocate, with Mr. Rajiv Sharma, Advocate, for the petitioner.

Mr. Sunish Bindlish, Advocate, for respondent No.3.

1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest?

HEMANT GUPTA, J.

A preliminary objection has been raised by the Revenue

relying upon the judgment of Hon'ble Supreme Court in Raj Kumar

Shivhare Vs. Assisstant Director, Directorate of Enforcement 2010

(253) ELT 3 that the writ petition against an order deciding an

application for waiver of condition of pre-deposit of duty is an

appealable order in terms of Section 35G of the Central Excise Act,

1944 (for short 'the Act'), therefore, the present writ petition CWP No.13288 of 2012 2

challenging an order passed by the Customs, Excise and Service Tax

Appellate Tribunal (for short 'the Tribunal') is not maintainable.

Before we consider the respective arguments of the parties,

certain statutory provisions of the Act as well as the Customs, Excise

and Service Tax Appellate Tribunal (Procedure) Rules, 1982 (for short

'the Rules') need to be extracted. The same are as under:

The Central Excise Act, 1944

"35F. Deposit, pending appeal, of duty demanded or penalty levied - Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied:

Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.

Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing."

"35G. Appeal to High Court - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment, if the High Court is satisfied that the case involves a substantial question of law.

CWP No.13288 of 2012 3

xx xx xx"

Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982

"28A. Procedure for filing and disposal of stay petitions - (1) (a) Every application preferred under the provisions of the Acts for stay of the requirement of making deposit of any duty demanded or penalty levied shall be presented in triplicate by the appellant in person or by his duly authorized agent, or sent by registered post to the Registrar or any other officer authorized to receive memoranda of appeals, as the case may be, at the Headquarters of the Bench having jurisdiction to hear the appeal in respect of which the application for stay arises;

xx xx xx"

"28C. Procedure for filing of and disposal of Miscellaneous

Application - The provisions of the rules regarding the filing of stay applications shall, in so far as may be, apply to the filing of applications under this rule (mutates mutandis)."

Mr. Sanjay Bansal, learned senior counsel for the

petitioner has vehemently argued that only an order of final

adjudication is appealable and not each and every order passed by the

Tribunal. Learned counsel for the petitioner has argued that the

judgment of the Hon'ble Supreme Court in Raj Kumar Shivhare's case

(supra) is distinguishable inasmuch as in the said case, the Supreme

Court was examining the provisions of Foreign Exchange Management

Act, 1999, whereas Section 35 of the said Act specifically provides that

any person aggrieved by "any decision or order" of the Appellate

Tribunal may file appeal to the High Court, whereas under Section 35G

of the Act, an appeal lies to the High Court from "every order passed in

appeal" by the Appellate Tribunal. It is contended that the order for CWP No.13288 of 2012 4

waiver of pre-deposit of duty is not an order passed in appeal, as order

passed in appeal is referable only to the final adjudicatory order. In

support of his arguments, Mr. Sanjay Bansal relied upon Shaw Wallace

& Co. Ltd. Vs. Income Tax Appellate Tribunal (1999) 240 ITR 579,

Visvas Promoters (P) Ltd. Vs. ITAT (2010) 323 ITR 114 and

Lakshmi Vilas Bank Ltd. Vs. Income Tax Appellate Tribunal &

others (2010) 329 ITR 564.

Mr. Jagmohan Bansal also supported the arguments raised

by Mr. Sanjay Bansal and also relied upon Commissioner of Central

Excise, Kolkata-II Vs. Shree Gobinddeo Glass Works Ltd. 2011

(263) ELT 178 and J.M.Ramachandra & sons Vs. CEGAT 2002

(139) ELT 36 in support of the argument that an order passed by the

Appellate Tribunal is not appealable.

On the other hand, Mr. Sunish Bindlish, learned counsel

for the Revenue relied upon Indoworth India Ltd. Vs. CESTAT,

Mumbai 2010 (253) ELT 364, Auram Jewellery Export (P) Ltd. Vs.

Union of India 2010 (251) ELT 365 and Vijay Plas Fabs (P) Ltd. Vs.

CESTAT, Chennai 2011 (273) ELT 183 to contend that an order

passed by the Appellate Tribunal is an appealable order.

Having heard learned counsel for the parties at length, we

find that an order passed by the Appellate Tribunal on an application to

seek waiver of pre-deposit of duty imposed is an appealable decision.

Section 35F of the Act makes it obligatory for the persons desirous of

appealing against decision of the Central Excise Authorities to deposit

with the adjudicating authority the duty demanded or the penalty levied. CWP No.13288 of 2012 5

The proviso contemplates that such requirement can be dispensed with,

if it causes undue hardship subject to such conditions as it may deem to

appropriate to impose so as to safeguard the interest of the Revenue.

Section 35G of the Act contemplates that an appeal shall lie to the High

Court from every order passed in appeal by the Appellate Tribunal.

Therefore, in terms of Section 35G of the Act, every order, which is

passed in appeal, is an appealable order. The expression 'every order'

will mean an order, which decides any of the substantive rights of the

parties.

Rule 11 of the Rules empowers the Tribunal to reject the

memorandum of appeal, if the documents referred to in Rule 9 are not

produced within the time limit allowed. The procedure for filing and

disposal of a stay petition is mentioned in Rule 28A, whereas the

procedure for filing and disposal of a miscellaneous application is

contemplated in Rule 28C as that of filing of stay applications.

A reading of Section 35F of the Act shows that deposit of

duty and/ or penalty is required to be made during the pendency of

appeal and that the Appellate Authority can dispensed with the pre-

deposit of the amount on such conditions, as it deemed fit to impose.

Therefore, an application for stay including that of application for

waiver of pre-deposit of duty is an application in pending appeal. The

deposit of the duty before filing of an appeal is not a condition

precedent for presentation of memorandum of appeal, but such deposit

is necessary for hearing of the appeal. Since the application for waiver

of pre-deposit of duty is an application filed during the pendency of CWP No.13288 of 2012 6

appeal, any order passed on such application is an order passed in

appeal by the Appellate Tribunal against which an appeal is

maintainable before this Court under Section 35G of the Act.

Though in Raj Kumar Shivhare's case (supra), the Hon'ble

Supreme Court was examining Section 35 of the Foreign Exchange

Management Act, 1999 which provides for an appeal against any

decision or order of the Appellate Tribunal, but the Court held that any

order or decision of the Appellate Tribunal would mean all decisions or

orders of the Appellate Tribunal, which are appealable to the High

Court. It observed as under:

"28. In Black's Law Dictionary the word 'any' has been explained as having a 'diversity of meaning' and may be "employed to indicate all and every as well as some or one and its meaning in a given Statute depends upon the context and subject matter of Statute". The aforesaid meaning given to the word 'any' has been accepted by this Court in Lucknow Development Authority Vs. M.K.Gupta AIR 1994 SC 787. While construing the expression "service of any description" under Section 2(o) of Consumer Protection Act, 1986 this Court held that the meaning of the word 'any' depends upon the context and the subject matter of the Statute and held that the word 'any' in Section 2(o) has been used in wider sense extending from one to all (para 4 at page 793 of the report). In the instant case also when a right is conferred on a person aggrieved to file appeal from 'any' order or decision of the Tribunal, there is no reason, in the absence of a contrary statutory intent, to give it a restricted meaning.

29. Therefore, in our judgment in Section 35 of FEMA, any 'order' or 'decision' of the Appellate Tribunal would mean all decisions or orders of the Appellate Tribunal and all such decisions or orders are, subject to limitation, appealable to the High Court on a question of law."

Though in the Foreign Exchange Management Act, 1999,

the expression used is "any 'order' or 'decision' of the Appellate CWP No.13288 of 2012 7

Tribunal", whereas the expression used in Section 35G of the Act is

'every order'. The expression 'every order' and 'any order or decision'

used in Foreign Exchange Management Act, 1999 are substantially

same in its rigour and consequences. Therefore, the judgment in Raj

Kumar Shivhare's case (supra) concludes the issue raised by the

Revenue against the petitioner.

Apart from the aforesaid judgment, considering the Act,

the Bombay High Court in Indoworth India Ltd. case (supra) has held

that an order directing deposit of amount is an order made in appeal

and, therefore, appealable in terms of Section 35G of the Act. It was

observed as under:

"4. ....Now considering aforesaid two provisions the question arises as to whether the order directing a party to deposit the amount before the Appellate Tribunal is an order made in appeal and if the answer is in the affirmative, whether an appeal lies under Section 35G of the Central Excise Act, 1944. We have no hesitation in holding that an order directing the deposit of the amount is an order made in appeal. Section 35F opens with the words "where in any appeal under this Chapter". The order of deposit is thus an order made in appeal. In fact, there is no other proceeding pending before the appellate authority. In fact, there are no separate proceedings, which deals with the issue of deposit. Any order for deposit must be said to have been made in an appeal only. Therefore, where such an order made, it will be an order from which the appeal will lie under Section 35G of the Central Excise Act."

In Auram Jewellery Export (P) Ltd. case (supra), the

Allahabad High Court was considering the pari materia provisions of

Sections 129B and 129E of the Customs Act, 1962. The Court held to

the following effect:

CWP No.13288 of 2012 8

"11. According to us, the words, 'every order passed in appeal' do not apparently exclude the jurisdiction of the High court in determining the question of pre-deposit as under Section 129E of the Act. Question of appeals etc. are to be governed by Chapter XV of the Act, which includes both, the final order and any order in connection with the appeal. Therefore, unless it is specifically excluded under such Chapter, we do not find any thing contrary from the plain reading of Chapter XV, particularly, Section 130 of the Act made for appeal to High Court. Had it been the case of only final order, there was no scope for the Legislature to incorporate the aforesaid words under Section 130 that "every order passed in appeal" is appealable, because solitary final order is required for disposing the appeal. That apart, the order impugned necessitated deposit and in default, automatic dismissal of the appeal. Hence, the order impugned possesses essence of finality."

In Shaw Wallace & Co. Ltd. and Visvas Promoters (P) Ltd.

cases (supra), the judgments relied upon by the learned Counsel for the

Petitioners, the issue examined was in respect of an order passed in

rectification application as not appealable in terms of Section 253 of the

Income Tax Act, 1961. The rectification applications are filed only after

final decision of the Authority. Therefore, the judgments referred to by

learned counsel for the petitioner have no applicability to the facts of

the present case.

In Shree Gobinddeo Glass Works case (supra) referred to

by Mr. Jagmohan Bansal, the primary issue examined was; whether the

appeals preferred could be dismissed for non-compliance of the orders

passed by the Tribunal directing pre-deposit under Section 35F of the

Central Excise Act, 1944 and under Section 122 of the Customs Act,

1962. The Court has held to the following effect:

"20. It is obvious from the said proviso pre deposit in pending hearing appeal is required where appeal is filed against any order in CWP No.13288 of 2012 9

connection of which any duty is demanded in respect of the goods which are not under the control of Central Excise authorities or any penalty levied under this Act. It, therefore, follows that where duty is demanded in respect of the goods which are not under control of Central Excise authority or penalty levied in order to secure the revenue the provision for pre-deposit has been made it mandatory, selectively a number of appeals contemplated in Section 35F of the said Act. In the sequel where pre deposit is not required at all, for example if any duty is levied in relation to any goods and it transpired later on levy of such duty and realization thereof is not warranted under the law then appeal could be preferred and in that case no pre deposit is required. Another example in case where goods in question on which the duty is levied is in custody and control of the Central Excise authorities then in such a situation no pre deposit is required.

xxx xxx xxx

23. Section 35F is an independent one and language of the provision appears to be mandatory and in all cases as mentioned therein and the power of dispensation of pre deposit is also provided in fit cases. The rules framed under the Act cannot provide for any additional right or provision, which are inconsistent with the provision of the Act itself. The learned Trial Judge has taken the help of few provisions of the rule as well as some notifications. We think those are of no help to dilute the provision of pre deposit or the ratio of the Supreme Court decisions of the aforesaid two cases."

The said observations, in fact, are not supporting the

argument raised by the learned counsel for the petitioner.

In J.M. Ramachandra & sons case (supra), the issue

examined by the Delhi High Court was doctrine of merger and when an

application for condonation of delay was declined in exercise of the

appellate jurisdiction of the Tribunal in respect of determination of rate

of duty of customs or to the value of goods, appealable to the Hon'ble

Supreme Court in terms of Section 129 of the Customs Act, 1962. It CWP No.13288 of 2012 10

was held that an order of declining condonation of delay is not

appealable to the Supreme Court under Section 130E of the said Act.

Even the said judgment does not address the issue raised in the present

petition.

Keeping in view the ratio of the judgment in Raj Kumar

Shivhare's case (supra) and that of Bombay High Court and Allahabad

High Court in Indoworth India Ltd. and Auram Jewellery Export (P)

Ltd. cases (supra) respectively, we find that an order passed by the

Tribunal on an application for waiver of pre-deposit of duty is an order

passed in appeal and is, thus, appealable in terms of Section 35G of the

Act.

In view of the fact that the petitioner has effective

alternative remedy of appeal against an order passed by the Tribunal,

we refrain ourselves from exercising the writ jurisdiction of this Court.

Consequently, the present writ petition is dismissed.

(HEMANT GUPTA) JUDGE

15.01.2013 (RITU BAHRI) Vimal JUDGE