2021 (7) TMI 734 - AT - Customs

Requirement of pre-deposit at the stage of filing appeal before CESTAT (second appeal) - whether appellant was required to pay 10% separately over and above 7.5% in terms of Section 129E of the Customs Act? - HELD THAT - The issue, whether the appellant is required to pay total 10% i.e. 7.5% 2.5% at the stage of filing appeal before CESTAT has been settled by the Hon ble Delhi High Court in the case of M/S SANTANI SALES ORGANISATION VERSUS CENTRAL EXCISE, CUSTOMS AND SERVICE TAX APPELLATE TRIUBNAL, DELHI AND OTHERS 2018 (6) TMI 249 - DELHI HIGH COURT where it was held that 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. Thus, in the case of second appeal before CESTAT, the appellant is required to pay total 10% i.e. 7.5% at first appellate stage and remaining 2.5% at the stage of appeal before the CESTAT. Therefore, the view taken by the Learned Commissioner (Appeals) that appellant at tribunal stage is required to pay total 17.5% i.e. 7.5% at first appellate stage and 10% at tribunal stage was held to be illegal. Therefore, the impugned order is not sustainable hence the same is modified. Appeal No C/12124/2018 is allowed by way of remand for passing a fresh order in the light of above observation. The said appeals are allowed by way of remand to the Adjudicating Authority to decide a fresh only on the aspect of adjustment of sanctioned refund against drawback claim already sanctioned.

Summary

Issues involved:
1. Entitlement for refund of a specific amount under Customs Act.
2. Requirement of pre-deposit at the second appeal stage.
3. Appropriation of refund against sanctioned drawback claims.

Analysis:

Issue 1: Entitlement for refund under Customs Act
The appeal in question revolved around the entitlement of the appellant for a refund of ?1,99,97,500. The Commissioner (Appeals) allowed the revenue's appeal, stating that the appellant needed to pay an additional 10% over and above the 7.5% pre-deposit as per Section 129E of the Customs Act. The original authority's order allowing the refund was set aside. Subsequently, the appellant filed appeals against the impugned order, arguing for their entitlement to the refund.

Issue 2: Requirement of pre-deposit at the second appeal stage
The main contention here was whether the appellant was obligated to make a pre-deposit of 7.5% + 10% at the second appeal stage. The appellant cited a judgment of the Hon'ble Delhi High Court in the case of SANTANI SALES ORGANIZATION, asserting their right to the refund based on this precedent. The Tribunal examined the relevant portions of the judgment and concluded that the appellant was only required to pay a total of 10%, with 7.5% at the first appellate stage and the remaining 2.5% at the CESTAT stage. The previous view that the appellant had to pay a total of 17.5% was deemed illegal, leading to the modification of the impugned order.

Issue 3: Appropriation of refund against sanctioned drawback claims
Regarding the adjustment of the sanctioned refund against drawback claims, it was found that the amount in question had been sanctioned and disbursed by the Original Adjudicating Authority. However, due to an appeal filed by the department, an arrangement was made between the deputy commissioner and the appellant. The adjustment against the amount already disbursed was made as a result of the sanctioned refund of the pre-deposit. The Tribunal, after disposing of the related appeal, directed a fresh decision by the Adjudicating Authority specifically on the aspect of the adjustment of the sanctioned refund against the previously sanctioned drawback claim.

In conclusion, the impugned orders related to the entitlement for refund and the appropriation against drawback claims were modified, and the appeals were allowed for a fresh decision in light of the Tribunal's observations and judgments.