1. The appellants have filed an appeal No. 67/83 to the Tribunal against order dated 6-10-1982 passed by the Collector of Central Excise, Meerut. The said order calls upon the appellants to pay Rs. 1,12,188.27 as duty of Excise and Rs. 25,000 as penalty.
2. The appellants filed Stay application in the appeal. Shri K.Narasimhan, Advocate for the appellants at the hearing of the Stay application contended that right of appeal is a matter of substantive right and not merely a matter of procedure and thus right become vested in the appellants when the proceedings were first initiated against them, by issue of show cause notice dated 8-5-1981 and order passed by the Collector on 6-10-1982. This right could not be taken away by subsequent legislation except by express enactment or necessary intendment. Shri Narasimhan submitted that Section 35F of the Central Excises & Salt Act, 1944 (hereinafter called the Act) requiring an appellant to make deposit of duty and penalty as pre-condition for an appeal was not applicable in the appellants' case. He reiterated that even before the amendment in Section 35 of the Act by the Finance Act, 1980, under Section 35 of the Act as it then existed the appellants had a right of appeal against the order in question to the Central Board of Excise & Customs. The proceedings against the appellants leading to the demand and the order under appeal commenced before 11-10-1982 and the amended provisions of Section 35 of the Act including Section 35F came into force on 11-10-82. By this newly added provision, right of appeal which was available to the appellants under Section 35 of the Act was being curtailed or whittled down. The appellants' right of appeal would be governed in the absence of express enactment or necessary intendment in subsequent legistation by the law which was in force when the proceedings commenced against the appellants. In support of his arguments, Shri Narasimhan relied on "Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh & Ors- 3. On behalf of the respondent, Smt. Vijay Zutshi, SDR submitted that Section 35F of the Act unmistakably showed that it was necessary for a person desirous of appealing against an order to deposit with the adjudicating authority the duty demanded or the penalty levied. Failure to do so, unless the Tribunal acting under the proviso dispensed with such deposit, would lead to rejection of the appeal. The provision clearly showed that it was applicable even if proceedings leading to demand commenced before the provision came into force. Smt. Vijay Zutshi on this argument tried to distinguish the ruling cited by Shri Narasimhan and submitted that in the light of her arguments ruling was not applicable to the case.
4. Arguments on the Stay application and the contentions aforesaid were heard on 2-6-1983. Though Stay was granted, the decision on the applicability or otherwise of Section 35F in the appellants' case was reserved. Order on this contention is being passed now.
5. It might at the outset be stated that in this order, the nature and scope of incidental and ancillary powers of granting stay which the Tribunal possessed independent of Section 35F of the Act, does not arise for consideration and it is not proposed to deal with the same.
6. Parties agreed before us that appellants earlier had a right of appeal to the Central Board of Excise & Customs and that the forum of appeal is now this Tribunal. It was also admitted by the parties that earlier no such condition as to deposit of duty or penalty for appeal to the Board as pre-condition was there.
7. The question is whether condition of deposit of duty or penalty introduced by Section 35F of the Act would apply in case where proceedings leading to demand of duty or penalty commenced before the provision came into force. Before we discuss the arguments advanced by the parties, we may briefly refer to the facts and proposition of law laid down in Hoosein Kasam Dada (India) Ltd. v. the State of Madhya Pradesh & Ors-(1953) SCR 987=1983 ELT, 1277.
Section 22(1) of the Central Provisions and Berar Sales Tax Act, 1947, provided that no appeal against an order of assessment should be entertained by the prescribed authority unless it was satisfied that such amount of tax as the appellant might admit to be due from him, had been paid. This Act was amended on the 25th Nov. 1949, and Section 22(1) as amended provided that no appeal should be admitted by the said authority unless such appeal was accompanied by satisfactory proof of the payment of the tax in respect of which the appeal had been preferred. On the 28th November, 1947, the appellant submitted a return to the Sales Tax officer, who, finding that the turn over exceeded 2 lacs, submitted the case to the Assistant Commissioner for disposal and the latter made an assessment on the 8th April, 1950.
The appellant referred an appeal on the 10th May, 1950 without depositing the amount of tax in respect of which he had appealed. The Board of Revenue was of opinion that Section 22(1) as amended applies to the case as the assessment was made, and the appeal was preferred after the amendment came into force, and rejected the appeal. The Supreme Court held that the right of appeal is a matter of substantive right and not merely a matter of procedure, and this right becomes vested in a party when the proceedings are first initiated in, and before a decision is given by, the inferior Court and such a right cannot be taken away except by express enactment or necessary intendment; that the appellant had a vested right to appeal when the proceedings were initiated i.e. in 1947, and his right to appeal was governed by the law as it existed on that date; that the amendment of 1950 cannot be regarded as a mere alteration in procedure or an alteration regulating the exercise of the right of appeal, but whittled down the right itself, and it had no retrospective effect as the Amendment Act of 1950 did not expressly or by necessary intendment give it retrospective effect, and the appeal could not therefore be rejected for nonpayment of the duty in respect of which the appeal was preferred.
8. The arguments advanced by Smt. Vijay Zutshi learned Senior Departmental Representative for distinguishing the decision in Hoosein Kasem Dada (India) Ltd. (Supra) was in fact advanced before the Supreme Court in 'Hoosein Kasam Dada 's case by Shri R. Ganapathy Iyer, learned Counsel for the State of Madhya Pradesh, the arguments advanced and the decision of the Supreme Court are extracted below:- "Shri Ganapathy Iyer urges that the language of section 22(1) as amended clearly makes the Section retrospective. The new proviso, it is pointed out, premptorily requires the authority not to admit the appeal unless it be accompanied by a satisfactory proof of the payment of the tax in respect of which the appeal is preferred and this duty the authority must discharge at the time the appeal is actually preferred before him. The argument is that after the amendment the authority has no option in the matter and he has no jurisdiction to admit any appeal unless the assessed tax be deposited. It follows, therefore, by necessary implication, according to the learned Advocate, that the amended provision applies to an appeal from an assessment order made before the date of amendment as well as to an appeal from an order made after that date. A similar argument was urged before the Calcutta Special Bench in Sardar Ali v. Dalimuddin (supra), namely, that after the amendment the court had no authority to entertain an appeal without a certificate from the Single Judge Rankin C.J. repelled this argument with the remarks at page 520: Unless the contrary can be shown, the provision which takes away jurisdiction is itself subject to the implied to the case before us.
The true implication of the above observation as of the decisions in the other cases, referred to above is that the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre-existing right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right. The argument that the authority has no option or jurisdiction to admit the appeal unless it be accompanied by the deposit of the assessed tax as required by the amended proviso to Section 22 (1) of the Act overlooks the fact of existence of the old law for the purpose of supporting the pre-existing right and really amounts to begging the question. The new proviso is wholly inapplicable in such a situation and the jurisdiction of the authority has to be exercised under the old law which so continues to exist. The argument of Shri Ganapathy Iyer on this point, therefore, cannot be accepted".
9. In the instant case, show cause notice leading to the demand was served on the appellant on 8-5-1981. This happened before Section 35F of the Act had come into force on 11-10-1982. In view of the Supreme Court decision which is law of land and admitted position that the appellants had a right of appeal without any condition as to pre-deposit on the date the proceedings commenced it must be held that Section 35F of the Act would not be applicable in the appellants' case.
10. As a result, appellants' contention that Section 35F requiring pre-deposit of duty or penalty is not applicable is accepted. The appeal would be heard without such deposit.