2017 (4) TMI 1222 - AT - Central Excise

Quantum of mandatory deposit - 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 u/s 35F of the CEA, 1944 and Section 129E of the CA, 1962? - Held 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 - 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).

Summary

Issues:
Quantum of mandatory deposit in 2nd appeal before the Tribunal against Commissioner (Appeals) order.

Analysis:

Issue 1: Interpretation of pre-deposit requirements for 2nd appeal
The dispute revolves around whether an appellant must pay 10% mandatory deposit over and above the 7.5% deposit of duty liability/penalties as per Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962. Divergent orders from different Tribunals created confusion. The appellant argued that the pre-deposit for the second appeal should be independent of the first appellate authority's deposit, citing a CBEC Circular for support.

Issue 2: Examination of legislative intent and CBEC Circular
The Larger Bench analyzed the provisions of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962. The CBEC Circular dated 16.09.2004 was scrutinized, and it was noted that while it specified a 10% deposit for appeals to the Tribunal, it did not clarify the legislative intent behind the pre-deposit provisions. The Bench emphasized that for the first appeal, a 7.5% deposit is required, refundable if the appeal concludes. However, for the second appeal, a 10% deposit is mandatory, regardless of the first appellate authority's deposit.

Issue 3: Independence of pre-deposits for first and second appeals
The Bench concluded that the pre-deposits for the first and second appeals should be treated independently. To exercise the statutory right of a second appeal, an appellant must deposit 10% of the duty confirmed or penalty imposed, irrespective of the 7.5% deposit for the first appeal. The decision of the Division Bench in ASR Multimetals Pvt. Ltd. was upheld, affirming the requirement of a separate 10% deposit for the second appeal before the Tribunal against the Commissioner (Appeals) order.

Conclusion:
The Larger Bench clarified that for a second appeal before the Tribunal, a separate 10% deposit of duty confirmed or penalty imposed is necessary, distinct from the 7.5% deposit required for the first appeal. The decision aligned with the legislative provisions and upheld the requirement for an independent pre-deposit for second appeals.