Quantum of Mandatory Deposit: 10% Separate Pre-deposit required to File Appeal in CESTAT
The Hon’ble CESTAT New Delhi (Larger Bench) vide its decision dated 20-04-2017 has decide the issue in the favour of revenue by holding that Mandatory Pre-Deposit at the time of Commissioner Appeal and CESTAT are independent and to be deposited separately. Thus at time of Filing Appeal in CESTAT assessee have to deposit 10% separate madatory pre-deposit irrespective the fact that he have already deposited 7.50% at the time of Appeal filed before the Commissioner (Appeals).
It is pertinent here to discuss the statue part regarding mandatory pre deposit at time of filing Appeal:
Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.
35F. 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 in clause (a) of sub-section (1) of section 35B, 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 the decision or order appealed against;
(iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten 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 the decision or order appealed against:
Provided that the amount required to be deposited under this section shall not exceed rupees ten crores:
Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014.
Explanation.—For the purposes of this section “duty demanded” shall include,—
(i) amount determined under section 11D;
(ii) amount of erroneous Cenvat credit taken;
(iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004.
From above provision of Section 35F which deal separately the both the Appellate authorities and ask the assessee to deposit the mandatory deposit @ 7.5% & 10% at the time of filing Appeal before the Commissioner (Appeals) and Hon’ble CESTAT respectively.
The Extract from decision of Ho’ble CESTAT New delhi
6.1 It can be seen from the above reproduced Sections, the dispute is basically only on the point as to the pre-deposit mandated for preferring second appeal before the Tribunal. It was submitted that CBEC’s Circular dated 16.09.2004 indicates the clear intention of legislature. On reading the said Circular,we find in paragraph No.2, more specifically 2.1, the Circular only states that in the event of appeal of appellant against order of Commissioner (Appeals) before the Tribunal, 10% is to be paid on the amount of duty demanded or penalty imposed by the Commissioner (Appeals). In fact, the clarification given by the Board does not indicate what is in the mind of the law makers enacting while the provisions of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962. Be that as it may, we find that the said provisions of pre-depositing an amount for preferring 1st appeal against the adjudication order needs to be done so, at the rate of 7.5% of the duty confirmed or the penalty imposed as the case may be. This would mean that the first appeal can be entertained only deposit of such an amount and on conclusion of the proceedings, he has option to go further in appeal before first appellate authority or if the appeal is disposed of, amount pre-deposited by him which is equivalent to 7.5% of the duty confirmed or penalty imposed as the case may be, needs to be refunded in accordance with law.
6.2 As regards the second appeal preferred against the first appellate authority’s order, the quantum of pre-deposit has been set at 10% instead of 7.5% of the duty confirmed or penalty imposed. In our view both the appellate proceedings i.e. before the first appellate authority and before the Tribunal, if is to be treated as an independent provisions then deposits as mandated needs to be made. 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. On reading of provisions of pre-deposits under Central Excise Act, 1944 and Customs Act, if an assessee or importer wishes to exercise his statutory right of second appeal, then the said exercise of right it needs to be considered as an independent right and proceeding subsequent to pre-deposit of the amount to exercise first appeal needs to be considered as having come to closure. In that case, an assessee or importer as the case may seeks legal remedies available to them, as regards mandatory pre-deposits made before first appellate authority, it needs to be decided in accordance with law.
6.3 In view of the foregoing we hold that the decision of the Division Bench of the Tribunal in the case of ASR Multimetals Pvt. Ltd. (supra) is correct and the appellant is required to deposit separately 10% of the amount of the duty confirmed/ penalty imposed, for preferring of appeal before the Tribunal against the order of Commissioner (Appeals).
Decision of CESTAT, New Delhi Larger Bench regarding 1o% seperate pre-deposit
