The requirement to deposit a percentage of the duty demanded or penalty levied as a condition for filing an appeal is not confiscatory in nature and is a valid exercise of the legislature's power to regulate the exercise of the right to appeal.

D.N. Patel, J.

1. These writ petitions have been preferred challenging Section 35-F of the Central Excise Act, 1944. This section has been amended with effect from 6th August, 2014 by section 105 of the Finance (No.2) Act, 2014, which prescribes that 7.5% or 10% of the duty demanded or penalty levied is to be deposited in case appeal is being preferred before the Commissioner (Appeals) or the Tribunal. This is mainly challenged in these four writ petitions.

2. Factual Matrix:

? These petitioners are the manufacturers and they are liable to make payment of excise duty under the Central Excise Act, 1944 (hereinafter to be referred to as the Act, 1944). They have been issued show-cause notices and ultimately, Orders-in-Original have been passed under the Act, 1944. These petitioners can prefer appeal either before the Commissioner (Appeals) or before the Tribunal under the Act, 1944. Section 35-F as it stands before the amendment i.e. prior to 6th August 2014 reads as under:-

“35-F. 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 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, decides such application within thirty days from the date of its filing.

Explanation:-For the purposes of this section duty demanded shall include,-

(i) amount determined under section 11-D;

(ii) amount of erroneous Cenvat credit taken;

(iii) amount payable under rule 57-CC of Central Excise Rules, 1944;

(iv) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004;

(v) interest payable under the provisions of this Act or the rules made thereunder.”

(Emphasis supplied)

? It appears that under the aforesaid provision, as a rule, an appellant had to deposit with the appellate authority or the Tribunal, the duty demanded or the penalty levied. Nonetheless, the application for waiving the deposit was also permitted to be preferred. Evaluating the undue hardship on the part of the assessee-appellant and safeguard of the interests of the revenue from the other side the amount of deposit may be waived by the Tribunal or the appellate authority by using the judicial discretion.

? By virtue of Section 105 of the Finance (No.2) Act, 2014, Section 35-F has been substituted and the said substituted Section 35-F which has been brought into force with effect from 6th August, 2014 reads as under:-

“35-F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.- The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal.-

(i) under sub-section (1) of Section 35, unless the appellant has deposited seven and a half per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Principal Commissioner of Central Excise or Commissioner of Central Excise;

(ii) against the decision or order referred to