1. The petitioner seeks the issue of a writ of certiorari to call for the records on the file of the first respondent in SP(MAS) 40/84 and Appeal No. ED(MAS) 57/84; and quash the same. Such a prayer has come to be made in the following circumstances : During the period 25-3-1982 to 30-7-1982, the petitioner cleared a quantity of 73,548 K.G. of 40's D.H.C.R. Cotton yarn to the West Bengal State Handloom Weavers' Co-operative Society, Calcutta, after paying duty at concessional rates. The concessional rate of duty can be availed of subject to two conditions, viz, (1) that the yarn is purchased by a registered handloom co-operative Society and (2) that the payment for such yarn is made by cheque drawn by such Co-operative society on its own Banker. In the instant case, it was found that the second condition was not satisfied. After issuing a show cause notice, the Central Excise authorities called upon the petitioner to pay differential duty on 75548 kg. of yarn which worked out to Rs. 36,774/- under Section 11A of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The petitioner preferred an appeal to the second respondent and prayed for stay of payment of Excise Duty. The second respondent directed the petitioner to execute a bond with Bank Guarantee for the full amount and gave time till 25-1-1984. As the order was not complied with and as the petitioner failed to seek extension of time, the second respondent rejected the appeal on 31-1-1984, for non-compliance of Section 35F of the Act.
2. Against the rejection of the appeal, the petitioner preferred a further appeal to the first respondent. The first respondent passed the impugned order remanding the case to the second respondent 'for de novo consideration subject to the condition that the appellant Mills make the deposit of the entire duty involved, within six weeks from date'. It is to quash this order, the writ petition has been filed.
3. Mr. V. Ramachandran, learned Counsel for the petitioner, contended that under Section 35 of the Act, the petitioner has a statutory right of appeal and that right cannot be defeated for alleged non-compliance with Section 35F of the Act. Hence, according to the petitioner's Counsel, the rejection of the appeal by the first respondent is ex-facie illegal. The second contention put forth was that the first respondent has no right, while dealing with the stay petition, to pass a conditional order that in the event of the petitioner paying the duty demanded, the appeal will be disposed of on merits by the second respondent.
3a. In support of this first contention, the petitioner's counsel referred to Section 35 and Section 35A of the Act which deals with appeals to Collector and procedure in appeal. He also referred to analogous provisions relating to appeals, in the Tamil Nadu General Sales-Tax Act and the Income-Tax Act, and argued that the right of appeal provided under the Act cannot be deprived solely on the ground of non-payment of the disputed tax amount. In support of his argument, he referred to the decision in United Tobacco Co. v. Collector, Central Excise : AIR1968AP282 (F.B.) which related to a case under the Sea Customs Act.
4. The first contention of the petitioner's counsel is clearly unsustainable. No doubt, Section 35 of the Act confers a right on an aggrieved person to prefer an appeal to the Collector. Likewise, Section 35A prescribes the procedure to be followed in the appeal. These sections do not refer to the dismissal of an appeal for non-payment of excise duty demanded. But by reason of these two Sections alone it cannot be said that an appeal cannot be dismissed for non-payment of the duty demanded or penalty levied. Section 35F, which is the relevant section for consideration, reads as follows :
'Section 35F : 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 the Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall pending 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 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 interests of the Revenue.'
In view of the clear terms of Section 35F, the Section has to be read in conjunction with Section 35(1). So read, it will be seen that the right of appeal is governed by Section 35F. In other words, unless a person deposits with the adjudicating authority the duty demanded or the penalty levied, he will not be entitled to file an appeal. However, the Legislature, coming to realise that an inflexible application of Section 35F would cause undue hardship in the case of certain persons, has added a proviso to Section 35F. Under the proviso, the Collector or the Appellate Tribunal has been granted the discretion to dispense with the deposit of the duty demanded or the penalty levied either unconditionally or subject to the imposition of reasonable conditions for safeguarding the interests of the Revenue. Such being the position, it is futile on the part of the petitioner to read Section 35 and Section 35F in severance and contend that non-compliance with the mandatory requirement of Section 35F cannot have any impact on an affected party's right to prefer an appeal under Section 35 and have the appeal heard and decided on merits. A comparative study of the provisions relating to appeal in the Central Sales Tax Act and the Income-Tax Act is not necessary, because we are only concerned with the interpretation of Sections 35 and 35F of the Act. The Full Bench decision of the Andhra Pradesh High Court relied on by the petitioner's counsel, cannot also advance matters for the petitioner in any manner, because the Bench was concerned with the interpretation of Section 189 of the Sea Customs Act which is very much different from Section 35F of the Act under consideration. Section 189 of the Sea Customs Act relates to payment of duty on goods which are in the custody of the Customs authorities, for obtaining release of the goods. Therefore, even if a party preferring an appeal fails to remit the requisite customs duty, the interests of the Revenue are safeguarded because the goods are in the custody or under the control of the Central Excise authorities. But, when the goods are not in their custody, the interests of the Revenue have to be protected and therefore, it is, that Section 35F makes it obligatory for an appellant to deposit with the adjudicating authority the duty demanded or the penalty levied, during the pendency of the appeal. On account of this vital difference, the ratio contained in the Full Bench decision can be of no avail to the petitioner.
5. The second ground on which the petitioner relies has to be rejected, because it is totally in conflict with the stand taken by the petitioner before the first respondent. In the impugned order, the Tribunal has observed as follows :
'Shri V. Narayana Moorthy, Advocate for the appellant, requested that further time be given to enable the appellant to deposit the amounts of Central Excise duty and the Collector of Central Excise (Appeals) be directed to hear the appeal on merits'.
Having thus pleaded before the Tribunal that the petitioner appellant only wanted further time to pay the disputed excise duty, there is neither grace nor justice in the petitioner now contending that the first respondent was only called upon to pass orders in the stay petition, but the first respondent went beyond the scope of the matter and has passed orders in the main appeal itself.
6. For the aforesaid reasons, the petitioner is held not entitled to the issue of a rule. Consequently, the writ petition will stand dismissed.