2016 (9) TMI 76 - AT - Customs

Waiver of pre-deposit - Section 35F(iii) of the Central Excise Act, 1944 - Section 129E of the Customs Act, 1962 - CBEC Circular No.984/8/2014-CX dated 16.09.2014 defective memos - whether Appellants are required to deposit an additional 10% of duty confirmed, while filing Appeal before CESTAT against Orders passed by the first appellate authority over and above 7.5% deposit made before the first appellate authority ? Held that - After success at the level of first appellate authority may be Legislature wants that the case has passed one test of first appeal successfully and Revenue deserves an additional 10% of the duty or penalty as deposit till the issue is finally decided in the second appellate stage. Appellants required to pay additional 10% of duty confirmed. Defect Memoranda were thus correctly issued by CESTAT Registry all appeals dismissed on account of non-compliance decided against appellant.

Summary

Issues:
Whether the Appellants are required to deposit an additional 10% of duty confirmed while filing an Appeal before CESTAT against Orders passed by the first appellate authority over and above the 7.5% deposit made before the first appellate authority.

Analysis:
The Appellants argued that as per Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962, along with CBEC Circular No.984/8/2014-CX, only a differential 2.5% deposit is required, as 7.5% was already paid before the first appellate authority. They contended that those who did not pay the initial 7.5% deposit should only pay 10% of the duty confirmed. The Revenue, on the other hand, argued that in other CESTAT Benches, Appellants pay an additional 10% deposit along with the 7.5% paid before the first appellate authority. The Revenue relied on the CBEC Circular to support their stance.

The issue revolved around the interpretation of Section 35F(iii) of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962, regarding the requirement of an additional 10% deposit while appealing before CESTAT after Orders by the first appellate authority. The lack of clarity in the legislation and the circular led to conflicting interpretations. The Tribunal noted that the success rate of departmental cases at the appellate level is low, hence the requirement for a higher deposit at the second appellate stage. The Appellant's argument of not being at a loss due to potential interest benefits was considered.

The Tribunal held that the Appellants were indeed required to pay an additional 10% deposit under Section 35F(iii) of the Central Excise Act, 1944 or Section 129E(iii) of the Customs Act, 1962, in addition to the 7.5% deposit made before the first appellate authority. Consequently, the Appeals were dismissed for non-compliance with the deposit requirements under the respective Acts.

This judgment clarifies the deposit requirements for filing Appeals before CESTAT, emphasizing the need for Appellants to adhere to the specified deposit percentages as mandated by the legislation, even if there are differing interpretations based on circulars.