News Update

Mandatory pre-deposit at Second stage appeal - Not 2.5%, but 10% - CESTAT

By TIOL News Service:

AHMEDABAD, DEC 06, 2016: NETIZENS may recall our story, wherein the Single Member Bench of the Eastern Zonal Bench of the CESTAT, while disposing a batch of appeals, held that the pre-deposit under Sec 35F of the Central Excise Act, 1944/129E of the Customs Act, 1962 is 10% of the duty/penalty in addition to the 7.5% pre-deposit already made before the Commissioner (Appeals).

In yet another batch of appeals, the Division Bench of the West Zonal Bench also rejected the plea that the appellants are required to deposit differential 2.5% after taking into account the amount of 7.5% already paid.

The Tribunal held:

+ On plain reading of the statutory provisions of Sec 129E/35F, it is seen that the wordings employed there in is as clear as daylight. In clause (iii) it is unambiguously prescribed that any person aggrieved by a decision or order referred to Clause (b) of sub-Section (1) of Sec129A/35B of Customs Act/Central Excise Act, unless deposits 10% of the duty/penalty or duty and penalty, as the case may be, the appeal shall not be entertained. We do not find any reason to read the said provision in any other manner so as to come to the conclusion that the Appellants are required to deposit 2.5% and not 10% as prescribed under the said provision in view of the settled principle of statutory interpretation.

+ Following the principles of interpretation of Taxing statutes laid down by the Bombay High Court in the case of Greatship (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai-I - 2015-TIOL-1100-HC-MUM-ST, it is held there is no substance in the argument that the amount paid under clause (i) of Sec.129E/35F which was paid at the time of filing Appeal before the first Appellate Authority can be adjusted against the amount of deposit required to be made under clause (iii) while filing the Appeal before the Tribunal.

Accordingly, the Tribunal refused to entertain the appeals.

(See 2016-TIOL-3154-CESTAT-AHM)