K.T. Thomos, J
1. As per Ext. P2 proceedings, the Collector of Central Excise, Cochin, demanded excise duty and penalty from the petitioner under the provisions of the Central Excises and Salt Act, 1944 (for short 'the Act'). Petitioner preferred an appeal against Ext. P2 before the Customs Appellate Tribunal. Along with the appeal he filed an application to dispense with the requirements of pre-deposit of the disputed duty and penalty as per the proviso to Section 35F of the Act. In the same application, he prayed for stay of recovery of the disputed duty and penalty. The appellate tribunal passed Ext. PS order on the said application dispensing with the requirements of predeposit on condition that the petitioner shall deposit a sum of Rs. 75,000/- on or before 30.6.1987. It is not disputed that the petitioner has deposited the said amount within time. But the petitioner's grievance is that the Customs Officials are now trying to recover the balance amount covered by the order appealed against Ext.P9 notice was issued by the Assistant Collector of Central Excise intimating the petitioner that proceedings under Rule 230 of the Central Excise Rules have already been initiated against the petitioners for recovery of balance amount. Hence the petitioner has filed this Original Petition mainly for quashing Ext. P9.
2. The Additional Collector of Central Excise through his counter affidavit seeks to justify the steps taken for recovery of the balance amount, contending that the order dispensing with the requirement of pre-deposit will not tantamount to staying the operation of the order appealed against. Learned counsel for the petitioner has argued that the order granting waiver of the requirement of pre-deposit must operate as an order of stay even if the Appellate Tribunal does not say so in so many words. According to the counsel, the effect of granting waiver of pre-deposit is only to relieve the appellant of his obligation to remit the balance during the pendency of the appeal. Senior Central Government standing counsel, on the other hand, contended that the requirement of pre-deposit is a condition for the maintainability of the appeal and hence the permission to waive the requirement has no more effect than to render the appeal legally maintainable.
3. To examine the validity of the said arguments I shall refer to the relevant provisions of the Act. Chapter VI-A of the Act deals with appeals in general. Section 35B provides an appeal to the Appellate Tribunal against orders passed by the Collector of Central Excise as an adjudicating authority. Section 35C contains the mode of exercise of the appellate powers. Sub-section (1) of Section 35C is extracted below:
'The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudicating or decision as the case may be, after taking additional evidence, if necessary.'
The succeeding provisions relate to the procedure to be followed by the Appellate Tribunal, revisional powers etc. The requirement of pre-deposit of the disputed duty is evisaged in Section 35F. It reads thus:
'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 Collector (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 Collector (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 interest of revenue.'
It is noticeable from the above provision that pre-deposit is not intended to act as a condition precedent for filing the appeal, for, pre-deposit need be made only 'pending the appeal'. It means that the deposit need not be made before filing the appeal. Can an appeal be dismissed as not maintainable if the appellant does not make pre-deposit of the amount or fails to get an order of waiver as envisaged in the proviso? It is pertinent to note that the Act does not contain any provision that the appeal shall be dismissed for failure to make the pre-deposit, unless it is waived by the Appellate Tribunal. In other statutes provisions are seen incorporated to make some conditions as precursors for appeals, eg., Section 30(1) of the Income-tax Act provides for appeal to the Appellate Assistant Commissioner from certain orders of the Income-tax Officer. The first proviso to the said Section says that 'no appeal shall lie against an order...unless the tax has been paid'.
The expression 'no appeal shall lie' in the first proviso was considered by the Supreme Court in Commissioner of Income-tax v. Filmistan Ltd. (1961 I.L.R. Vol. 42 -163). The rigidity of the prohibition was slightly relaxed by the Supreme Court holding that 'all that the proviso means is that the appeal will not be held to be properly filed until the tax has been paid'. Another instance is the provision contained in Section 14(1) of the General Sales Tax Act which enables the filing of an appeal to the Appellate Assistant Commissioner. The relevant provision is that 'the memorandum of appeal shall be accompanied by proof of payment of the tax admitted by the appellant to be due'. This court has held in Gangadharan Pillai v. Sales Tax Officer (1965 S.T.C. Vol. 16 - 578) that mere presentation of an appeal without such proof will not amount to the preferring of an appeal as contemplated by Section 14(1) of the General Sales Tax Act. Similar provision is seen included in the Sales Tax Acts passed by the State legislatures. Section 144 of the Kerala Panchayats Act says that no appeal shall lie unless the tax depended is paid. It seems to be almost like a general pattern in using such words to carry the legislative intent that the maintainability of the appeal will depend upon the deposit of the amount or fulfilment of certain other conditions. Such words are conspicuously absent in the relevant provisions of the present Act which deal with appeals. So it cannot be inferred that the utility of Section 35 F is not to render an appeal maintainable or not depending on the making of the pre-deposit envisaged in the section. Once an appeal is filed, the same can be disposed of only on merits either confirming or modifying or annulling the decision or order appealed against or by remanding the case back to the authority which passed the order. It is pertinent to note that the Appellate Tribunal is not given the power to dismiss the appeal for default either. In this context it is of advantage to make a reference to the Supreme Court decision reported in Commissioner of Income-tax v. Chenniappa Mudaliar (1969 I.T.R. Vol. 74 - 41). The background of the case is that the Madras High Court struck down Rule 24 of the Income-tax Appellate Tribunal Rules which gave power to the Income-tax Appellate Tribunal to dismiss the appeal for default, being repugnant to Section 33(4) of the Income-tax Act. As per the said section, the Income-tax Appellate Tribunal is obliged to decide the appeal after giving an opportunity to the parties to put forward their case. The decision of the Madras High Court has upheld by the Supreme Court in Chenniappa Mudaliar's case (cited supra). Even when power was conferred through delegated legislative process to dismiss appeal for default the power was not allowed to be exercised since the Supreme Court found that conferment of such power is contrary to the mandate of the main provision which casts a duty on the appellate forum to decide the appeal on merits. The position here is better because no rule has been formulated under the Act which affects the appellate jurisdiction. Hence it can safely be held that an appeal filed under Section 35 C can be disposed of only on merits.
4. If Section 35F cannot be read as laying down a condition precedent for the maintainability of an appeal, then the provision must have some utility. What must be its utility? Some indications can be gathered from the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 (called 'CEGAT Rules'). Rule 28 is given the title 'Procedure for filing and disposal of stay petitions'. Sub-rule (1) (a) reads thus:
'Every application preferred under the provisions of the Act 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 authorised agent, or sent by registered post to the Registrar or any other officer authorised 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.'
A reading of the body of the sub-rule in conjunction with the title of the Rule helps to discern the point that the order passed on the application is meant to operate as a stay. Of course, the stay envisaged therein applies to the requirement of making the pre-deposit. But the effect of the order must have some advantage to the appellant who makes the application. The only advantage which can be conceived of is that the appellant will be relieved of the burden to pay the amount or balance amount, as the case may be, during the operation of the stay order. No other usefulness can be thought of with such an order so far as the appellant is concerned. Hence, I take the view that the order dispensing with the requirement of predeposit will operate as a stay order against recovery of the amount, or balance amount till the disposal of appeal.
I, therefore, direct the respondents to refrain from taking any coercive or other steps for the recovery of the balance amount covered by Ext. P2 until disposal of Ext. P3 appeal.
Original Petition is disposed of in the above terms.