2022 (6) TMI 428 - AT - Central Excise

Maintainability of appeal - requirement of mandatory pre-deposit - appellate has deposited entire amount of duty (100% of duty) instead of 7.5% / 10% - Only demand of penalty and interest was left over - Appropriating demand and penalty with sanctioned rebate amount towards pre-deposit during pendency of appeal - HELD THAT - From the section 35F the appellant was required to pay only 10% (7, 5% at Commissioner Appellate stage 2.5% at CESTAT appellate stage). When this appropriation was made on 12.09.14 the appellant not only paid this 7.5% or 10% as the case may be but have paid the entire duty amount. The appropriation was made towards the penalty and interest only. Regarding recovery of dues when the appeal is pending the Board has issued a Circular Circular No. 984/8/2014-CX. dated 16-9-2014 - From the circular it is clear that against the adjudged dues the appellant for filing an appeal is required to pay only 7.5% or 10% as the case may be. On payment of such amount entire remaining amount stand stayed if this be so out of the remaining amount no recovery can be made. As stated above the appellant not only paid 7.5%/10% but the entire duty therefore in terms of Section 35F read with Board Circular Circular No. 984/8/2014-CX. dated 16-9-2014 the revenue should not have recovered the amount of penalty and interest by way of appropriation from the sanctioned rebate claim. The appellant s demand case got settled under SVLDRS-2019 for this reason also no amount shall be allowed to be appropriated. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appropriation of demand towards penalty and interest from sanctioned rebate claim during pendency of appeal.

Analysis:
1. The issue in question pertains to the correctness of the revenue's action in appropriating a demand of Rs.4,50,572/- towards penalty and interest from a sanctioned rebate claim during the period when the demand case was pending before the tribunal.

2. The appellant's counsel argued that since the appellant had already deposited the entire duty amount in the demand case and only penalty and interest remained outstanding, the appropriation from the sanctioned rebate claim was not justified. The counsel relied on various judgments to support this argument.

3. On the other hand, the revenue's representative reiterated the findings of the impugned order, defending the appropriation made.

4. The Member (Judicial) carefully considered the submissions from both sides and reviewed the records. It was observed that the appellant had fulfilled the mandatory pre-deposit requirement for filing an appeal, as per Section 35F of the Central Excise Act, 1944. The appellant had not only paid the required percentage but the entire duty amount, rendering the appropriation of penalty and interest unjustified.

5. Referring to a circular issued by the Board regarding recovery of amounts during the pendency of appeals, it was highlighted that no coercive measures for recovering the balance amount beyond the pre-deposit percentage should be taken while an appeal is pending. The circular specified that recovery actions could only be initiated after the case's disposal in favor of the department.

6. Considering the appellant's compliance with the pre-deposit requirements and the settlement of the demand case under 'SVLDRS-2019', the Member concluded that the revenue's recovery of penalty and interest through appropriation from the sanctioned rebate claim was unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the Appellate Tribunal CESTAT Ahmedabad.