Amount of Pre-deposit filed at the time of First appeal would not be adjusted towards the amount payable on second appeal.
In a significant ruling, the larger bench of the CESTAT, Delhi held that separate amount of pre-deposit shall be paid by the appellants at the time of filing first and second appeals before the Commissioner (Appeals) and the CESTAT.
Consequently, the pre-deposit of 7.5% paid at the time of first appeal cannot be adjusted towards the pre-deposit of 10% to be remitted while filing second appeal.
The issue before the bench was that whether an appellant has to pay 10% mandatory deposit over and above the mandatory deposit of 7.5% of the duty liability/penalties, as the case may be, as provided under Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962.
Earlier, the Kolkata and Ahmedabad benches held that pre-deposit of 10% of the amount of the duty and penalty and as the case may be needs to be deposited over and above the amount mandated to be deposited before the first appellate authority.
It was contended on behalf of the Department that the pre-deposit before first appellate authority and second appellate authority are independent. Relying upon the decision of the Ahmedabad CESTAT in ASR Multimetals Pvt. Ltd and the CBEC Circular No. 984/8/2014 dated 16.09.2014, it was contended that when the appellant approaches the Tribunal on second appeal, he has to remit a fresh 10% of demand as pre-deposit.
The bench found that the first appeal can be entertained only deposit of such an amount and on conclusion of the proceedings. The appellant 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.
It was further noted that 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.”
It was, therefore, held that the decision of the Division Bench of the Tribunal in the case of ASR Multimetals Pvt. Ltd. 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).
Read the full text of the Order below.
