At, High Court of Madhya Pradesh
By, THE HONOURABLE MR. JUSTICE N.K. JAIN
For the Appearing Parties: B.G. Neema, V.K. Jain , Advocates.
(1.) PETITIONER is aggrieved by the Order (Annexure P/6), passed by respondent No. 2, insofar as it relates to the adjustment of the refund of the amount deposited by the petitioner with respondent No. 2, under Section 35f of the Central Excise Act, 1944, in connection with his appeal filed before the Central Excise and Gold Control Appellate Tribunal (CEGAT).
(2.) THE impugned adjustment has been made against some other demands which are presently subject-matter of appeal pending before the Commissioner of Appeals. An application for stay and dispensation of pre-deposit under Section 35f are also pending before the Commissioner.
(3.) I have heard Shri V. K. Jain, LC for the petitioner and Shri B. G. Neema, LC for the respondents.
(4.) PRE-DEPOSIT under Section 35f is made by the person desirous of appealing against decision or order of adjudication, pending disposal of appeal preferred against such adjudication. Obviously the amount so deposited is liable to be refunded to the appellant in case he succeeds in appeal and the demand is set aside.
(5.) SECTION 11 of the Act provides for adjustment/deduction of the amount payable to a person from whom a sum is recoverable or due under the Act. In the instant case although some adjudication has been made against the petitioner, but the same is under challenge in appeal and his application for stay is also pending consideration before the Appellate Authority. Under the circumstance it cannot be said that the amount has become recoverable or due from him.
(6.) HIGH Courts of Delhi and Allahabad have taken the view that the amount deposited in terms of Section 35f remains a deposit pending appeal and is thereafter available for appropriation consistently with the final order made in the appeal. Once the order of adjudication is set aside, the amount of pre-deposit has to be refunded to the appellant. The Allahabad High Court has further observed that recovery of dues during pendency of stay application and application for dispensation of pre-deposit is not proper. [see 2000 (122) E. L. T. 34 (Del.) and 1992 (61) E. L. T. 16 (All.)]. High Court of Bombay has also taken similar view in Thromo Plastic Industries v. Union of India [w. P. No. 3919/87, decided on 24-2-88, 1991 (51) E. L. T. 629 (Bom.)]. I respectfully agree with the view taken by these High Courts and do not approve the action of the respondent authority to take a recourse to Section 11 even when the order of adjudication is subject-matter of appeal and the application filed under Section 35f of the Act is still pending consideration with the Appellate Authority. It is significant to note that even the Central Board of Excise and Customs has issued, instructions that it is not fair and just to proceed with the recovery proceedings while application for stay of the impugned order or for waiver of condition of pre-deposit was pending before the Appellate Authority. Further clarification issued in this regard by the Board and filed today by the learned Counsel for the respondents does
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not make any difference inasmuch as it only says that no coercive process shall also be taken for recovery of the dues pending decision of the stay application. It will be thus seen that the impugned order, adjusting the amount deposited u/s 35f is unsustainable in law. Accordingly, this petition is allowed and the impugned order is quashed.