Pre-deposit - We would be adding words to plain and unambiguous provision if we stipulate that 10% pre-deposit will be over and above 7.5% pre-deposit made at time of first appeal: HC
By TIOL News Service
NEW DELHI, JUNE 04, 2018: IN the matter of pre-deposit required to be deposited by an appellant in further appeal before the CESTAT pursuant to the substitution of the provisions concerned under the CEA, 1944 [s.35F] and the Customs Act, 1962, [S.129E] by the Finance Act, 2014 (w.e.f. 06.08.2014), the dispute began its journey with the D.O.F.No. 334/15/2014-TRU New Delhi, the 10th July 2014 and continued with the Board Circular 984/08/2014-CX dated 16 September 2014 only to find a culmination of sorts by the Larger Bench decision.
The Larger Bench of the CESTAT - 2017-TIOL-1414-CESTAT-DEL-LB in its order dated 20 April 2017 held thus -
CX/CUS/ST - To prefer an appeal before Tribunal, appellant needs to deposit 10% of amount of duty/penalty irrespective of amounts equivalent to 7.5% deposited by them before Commr.(A): LB
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."
This decision was apparently a short-lived one because the CESTAT, New Delhi, came out with another Circular dated 11th July 2017 informing that the Circular dated 27th April 2017 is kept in abeyance and that - It is desirable that the demand of 10% additional mandatory deposit on the fresh appeal be kept in abeyance till further orders.
Apparently, this Circular came to be issued because -
"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."
Kindly see our news item - Appeal to Tribunal against O-in-A - Pre-deposit 7.5% plus10% - CESTAT backtracks - Accept 2.5% for now
The Writ Petition was decided recently.
The High Court after extracting the provisions concerned observed -
Quantum of Pre-deposit in second appeal:
++ It is clear from the aforesaid provisions that a graded scale of pre-deposit has been provided. In case of first appeal, whether before the Tribunal or before the Commissioner (Appeals), 7.5% of the duty and penalty in dispute must be deposited. In case of second appeal before the Tribunal, the amount gets enhanced from 7.5% to 10%.
++ An appeal, whether first or second, is continuation of original proceedings. Further, appeal being a substantive right created by the statute can be circumscribed by the conditions imposed by the Legislature, including condition of pre-deposit. However, there are rulings that condition of pre-deposit should not be so onerous and harsh so as to amount to an unreasonable restriction, thereby rendering and making the right of appeal illusory and delusive.
++ Charging provision of the taxing law must be strictly construed. In taxing enactment one should normally look at what is said in the provision, without reading anything into it impliedly or on the basis of presumption, for there is no room for any intendment.
++ Language of Section 35F of the C.E. Act is unchallenging and meaning of words and conditions placed is plain and lucid. 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 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 first appeal. There is logic in increasing pre-deposit by 2.5% when 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.
++ On careful perusal of the aforesaid provisions as elucidated, it is difficult to accept the plea and contention of the Revenue and the reasoning given by the Larger Bench of the Tribunal in In Re: Quantum of Mandatory Deposit (supra).
++ Our opinion and ratio that difference between 7.5% and 10% is required as a pre-deposit, gets affirmation in view of Circular No. 984/08/2014-CX dated 16th September, 2014.
Applicability of s.35F (w.e.f. 06.08.2014) to Service Tax matters
++ The words or expression "as in force from time to time" and "as they apply to in relation to duty of excise" in Section 83 of the Finance Act with reference to the stated provisions of the C.E. Act, clearly reflects and clinches the issue that the legislature wanted subsequent amendments in the enumerated sections of the C.E. Act, would equally apply to service tax. This is the case of reference or citation of one or more sections into other statute and not reference by incorporation…, therefore, the amended provisions of Section 35F would apply, as it is specifically stipulated in Section 83 of the Finance Act that relevant provisions of C.E. Act indicated therein as in force from time to time will apply.
Conclusion:
+ The Writ Petition was allowed by setting aside the order and direction of the Tribunal that the petitioner must deposit additional 10% of the duty and penalty in dispute for the second appeal to be heard and adjudicated.
+ The circular dated 27th April, 2017 issued by the Tribunal was quashed. It is directed that the petitioner and others on filing 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.
+ Contention that Section 35F of the C.E. Act does not apply to service tax appeals and, therefore, no pre-deposit is required to be made is rejected.
(See 2018-TIOL-1058-HC-DEL-ST)
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