Appeal to Tribunal against O-in-A - Pre-deposit 7.5% plus10% - CESTAT backtracks - Accept 2.5% for now
By TIOL News Service
NEW DELHI, July 12, 2017: THE JS(TRU-I) in his letter D.O.F.No. 334/15/2014-TRU, 10th July, 2014 had communicated -
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Amendments in the Central Excise Act, 1944
13) Section 35F is being substituted with a new section to prescribe a mandatory fixed predeposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and another 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs.10 crore.
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The word "another" became a pain in the days to come.
The CBEC had its ears to the ground and so came out with a Circular 984/08/2014-CX dated 16 September 2014 clarifying -
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2. Quantum of pre-deposit in terms of Section 35F of Central Excise Act, 1944 and Section 129E of the Customs Act, 1962:
2.1 Doubts have been expressed with regard to the amount to be deposited in terms of the amended provisions while filing appeal against the order of Commissioner (Appeals) before the CESTAT. Sub-section (iii) of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 stipulate payment of 10% of the duty or penalty payable in pursuance of the decision or order being appealed against i.e. the order of Commissioner (Appeal). It is, therefore, clarified that in the event of appeal against the order of Commissioner (Appeal) before the Tribunal, 10% is to be paid on the amount of duty demanded or penalty imposed by the Commissioner (Appeal). This need not be the same as the amount of duty demanded or penalty imposed in the Order-in-Original in the said case.
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The Tribunal in the cases of Hindalco Industries Ltd. and ors. - 2016-TIOL-3050-CESTAT-KOL and ASR Multimetals Pvt. Ltd. and ors - 2016-TIOL-3154-CESTAT-AHM held that while filing appeals before CESTAT pre-deposit of 10% of the amount of the duty and/or penalty, as the case may be, needs to be deposited over and above the amount mandated to be deposited before the first appellate authority.
The Delhi Bench of the Tribunal viewed the provisions differently. In the case of Balajee Structural (India) Pvt. Ltd. vs. Commissioner of Central Excise, Raipur, the CESTAT held that the pre-deposit of 10% for preferring an appeal before the Tribunal against Commissioner (Appeals) order is inclusive of 7.5% deposited at the time of preferring appeal before the first appellate authority from the adjudication order.
In view of the conflicting decisions, the Larger Bench came onto the scene and after taking note of the Circular and the cited decisions concluded -
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"…In short, in order to prefer an appeal before the Tribunal, an assessee/appellant needs to deposit 10% of the amount of duty confirmed or the penalty imposed, as the case may be, irrespective of the amounts equivalent to 7.5% deposited by them for preferring an appeal to the first appellate authority."
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We reported this order dated 20 April 2017 as 2017-TIOL-1414-CESTAT-DEL-LB.
From the day the provisions made their appearance in the Finance Bill, 2014 and the Circular issued on 16 September 2014, we had extensively covered the issue in DDT 2394, DDT 2439.
And after the Larger Bench judgment was reported by us on 26 April 2017, we had carried two incisive articles on the issue titled "Is The Larger Bench order enforceable, Legally?" and "Quantum of Mandatory Deposit issue.
Incidentally, the CESTAT, New Delhi had also come out with a Circular dated 27 April 2017 communicating this LB decision and also instructing thus -
"In terms of Larger Bench order dated 20/04/2017 (Copy enclosed), appellants, for preferring appeal against Commissioner's (Appeals) order, are required to deposit separately 10% of the amount of the duty confirmed/penalty imposed over and above the amount deposited before Commissioner (Appeals). All concerned are directed to ensure strict compliance of the said Order."
Be that as it may, the Larger Bench order continued to hold sway till the day before, because yesterday the CESTAT has issued the following Circular which reads -
"Hon'ble High Court of Delhi on 23.5.2017 has passed an interim order in W.P. No. 4551/2017 and accordingly, the demand of 10% additional mandatory deposit over and above the amount deposited before Commissioner (Appeals) is stayed till further orders. The circular dated 27.4.2017 issued by this office is also kept in abeyance.
It is desirable that the demand of 10% additional mandatory deposit on the fresh appeal be kept in abeyance till further orders."
As they say, better late than never!
But, this joy seems to be ephemeral, because the new-age GST is pretty clear with what it wants.The central idea relating to "pre-deposit requirement" is contained in Sections 107 and 112 of the CGST Act, 2017 and lays bare the following -
No appeal can be filed unless the assessee has paid in full or in part of the amount of tax, interest, penalty etc. arising from the order appealed against, as admitted by him. In respect of the disputed amount, while filing an appeal before the appellate authority, the assessee needs to pay as pre-deposit an amount equal to ten per cent and in case of appeal to the Tribunal, an amount equal to twenty per cent of the amount of tax in dispute arising from the impugned order. It is also clarified that the said amount of twenty per cent is in addition to the ten per cent that may have been deposited earlier while filing appeal before the appellate authority.
Once again, welcome to the revolutionary Good and Simple Tax!
(See Circular)
