The Delhi High Court, last week, held that there is no need to make separate payment of 7.5% and 10% as pre-deposit for First and Second appeal in case of customs, excise and service tax matters.
The bench further quashed the circular dated 27th April, 2017 issued by the Delhi CESTAT and held that “It is directed that the petitioner and others on filing the second appeal before the Tribunal are required to deposit 10% of the amount of duty/ penalty as confirmed by the first appellate authority inclusive of 7.5% pre-deposit made for the first appeal. 10% would not be in addition to and over and above 7.5% of pre-deposit made for the first appeal,”
A two-judge bench comprising Justice Sanjiv Khanna and Justice Chander Sekhar was allowing an appeal filed by M/s Santani Sales Organisation.
The bench, however, rejected the plea of the petitioners that Section 35F of the Central Excise Act does not apply to service tax appeals and therefore no pre-deposit is required to be made.
The bench noted that the language of Section 35F of the C.E. Act is unchallenging and meaning of words and conditions placed is plain and lucid. The requirement is to pre-deposit 7.5% of the duty and penalty in dispute, and in case of the second appeal pre-deposit of 10% of the duty and penalty in dispute is mandated.
“We say so because of syntactic and adverbial clarity which is apparent. The provision suffers from no ambiguity and is not open to diverse interpretations. Section 35F of the C.E. Act should not be construed by adding or substituting words to clarify and iron out assumed doubts. Intent as cogently reflected in simple words is that the assessee on the second appeal should pre-deposit 10% of the total tax and penalty subject matter of the appeal. It is not to ignore the pre-deposit of 7.5% already made to file the first appeal. There is logic in increasing pre-deposit by 2.5% when the second appeal is filed, but we would be adding words to the plain and unambiguous provision if we stipulate that 10% pre-deposit will be over and above 7.5% pre-deposit made at the time of the first appeal. Expression or words 17.5% or an additional 10% deposit instead of using mere 10% pre-deposit have not been used. Appropriateness of the meaning attached to 10% pre-deposit in the context is apparent,” the bench said.
“Deposits made during the pendency of the proceedings, or even after the order-in-original is passed, have to be taken into consideration for determining and deciding whether the condition of pre-deposit of 7.5% or 10% have been satisfied. Earlier deposits do not get obliterated and are not to be treated as inconsequential. Equally pertinent is the second sentence in paragraph 3.1, which states that any shortfall from the amount stipulated in the Section shall have to be paid before filing of an appeal before the appellate authority,” the bench added.