Since enactment of Finance(no. 2) Act, 2014, various ambiguities arose regarding the concept of mandatory pre-deposit of 7.5%/10% at the time of filing appeal before CCE(A) and CESTAT, as the case may be, under section 35F of Central Excise Act, 1944 and section 129E of Customs Act, 1962.
Now, vide Circular No 984/08/2014-CX, dated 16th September, 2014, the Central Board of Excise & Customs (CBEC) has addressed various issues emerging out from the same: The said circular has dealt upon the following areas:
Quantum of pre- deposit:
- Appeal before CESTAT against the order of CCE(A) shall be accompanied with 10% of duty or penalty imposed by CCE(A), which may not be the same as determined originally by adjudicating authority;
- Therefore, it is intended that no adjustment shall be allowed on account of pre-deposit made earlier equal to 7.5% of duty at the time of filing appeal before CCE (A).
Note: The circular has used the expression 10% of duty or penalty, whereas, it has been categorically amended in Finance (no.2) Act, 2014 that in case of penalty and duty under appeal, the prescribed percentage shall be computed only on duty and not penalty.
Payment made during investigation:
- The payment made during the course of investigation or audit, prior to filing of appeal, shall be considered as pre-deposit as well and be adjusted accordingly;
- If excess amount (i.e. over and above 7.5% or 10%, as the case may be) is paid earlier during audit, the said excess amount shall not be treated as pre-deposit.
- The date of filing of appeal shall commence from the time when the aforesaid amount is deposited during the audit/investigation.
Recovery of amounts during appeal:
- Circular for recovery of demand (issued in Jan’13) has become redundant for appeals filed post 6th Aug’14.
- No recovery proceedings shall be initiated till the appeal is disposed of by CESTAT.
- In other words, no separate stay application is required till the order of CESTAT. Only, after the order of CESTAT/High Court, the stay application needs to be filed to High Court/ Supreme Court
- Earlier, stay application was required to be made at the time of filing appeal before CESTAT as well, against the order of CCE(A)/CCE.
Refund of pre-deposit:
- Interest @ 6% p.a. on delay in refund of pre-deposit shall be payable from the date of making the deposit till the date of refund;
- Refund application needs to be made by the appellant and within 15 days from the receipt of letter (whether order is further challenged by department or not), the refund along with interest shall be paid.
- The application shall be accompanied by self attested Xerox copy of order in appeal or order of CESTAT, and attested Xerox copy of document evidencing the payment of pre-deposit.
The aforesaid circular may be downloaded from the following link: