2018 (10) TMI 654 - AT - Service Tax

Pre-deposit - Section 35F(i) of the Central Excise Act - Held that - As per the requirement of Section 35F the appellant is required to pay only 10% of the disputed demand for filing the appeal before the Tribunal and in the present case the appellant paid 7.5% before filing the appeal before the Commissioner (Appeal) and 10% of the impugned demand before filing the appeal before the CESTAT, thereby making total of pre-deposit of 17.5% instead of 10%, as is required under Section 35F. The original authority after considering the submissions of the appellant has rightly allowed the refund of excess 7.5% of the predeposit - this position was also clarified by the board vide circular dated 10.03.2017 wherein the board has observed that refund of pre-deposit need not be subjected to the process of refund of duty under Section 11B of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Section 35F regarding pre-deposit for filing appeals.
2. Applicability of judicial precedents in determining pre-deposit amounts.
3. Refund of excess pre-deposit amount.
4. Clarification on the process of refund of pre-deposit.

Analysis:

Issue 1: Interpretation of Section 35F regarding pre-deposit for filing appeals
The appellant, registered for commercial & industrial construction services, faced a service tax demand confirmed by the Additional Commissioner. The appeal process involved pre-deposits under Section 35F. The appellant paid 7.5% before the Commissioner (Appeal) and 10% before the CESTAT, totaling 17.5%, exceeding the required 10%. The appellant argued that the High Court's ruling in a similar case clarified that 10% includes the initial pre-deposit, not in addition to it. The Tribunal agreed, setting aside the impugned order and allowing the appeal.

Issue 2: Applicability of judicial precedents in determining pre-deposit amounts
The appellant cited a High Court ruling to support their claim that 10% pre-deposit includes the initial amount paid for the first appeal. The Tribunal acknowledged this precedent, emphasizing that the appellant's total pre-deposit of 17.5% exceeded the statutory requirement of 10%. By aligning with the judicial interpretation, the Tribunal found the impugned order unsustainable and ruled in favor of the appellant.

Issue 3: Refund of excess pre-deposit amount
Following the excess pre-deposit, the appellant sought a refund of the surplus amount. The original authority allowed the refund, considering the appellant's submissions and the legal position clarified in a board circular. The Tribunal upheld the refund decision, emphasizing that the excess pre-deposit did not require the standard duty refund process under Section 11B of the Central Excise Act, 1944.

Issue 4: Clarification on the process of refund of pre-deposit
The Tribunal clarified that the excess pre-deposit refund does not follow the duty refund process under Section 11B, as highlighted in a board circular. By aligning with the legal position and the High Court's decision, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief necessary.

This detailed analysis highlights the Tribunal's interpretation of Section 35F, reliance on judicial precedents, refund of excess pre-deposit, and the clarification on the refund process, leading to the decision in favor of the appellant.