One of the controversial amendments introduced in the Finance Act, 2014, was a mandatory pre-deposit for filing appeals in central excise and customs matters. The Central Board of Excise and Customs (CBEC) has now issued clarifications (Circular F.No. 390/Budget/1/2012-JC dated September 16) that allay most of the trade’s apprehensions. Some irritants do remain.
The best part of the latest instructions is that no coercive measures for recovery of the balance amount i.e. in excess of 7.5 per cent or 10 per cent deposited in terms of Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962, shall be taken during the appeal’s pendency, where the party/assessee furnishes to the jurisdictional authorities proof of payment of the stipulated amount as pre-deposit of 7.5/10 per cent, subject to a limit of Rs 10 crore and a copy of the appeal memo filed with the appellate authority. This means a stay of the order being appealed against need not be sought in cases where an appeal is filed and the prescribed amount is deposited. This clarification liberates the appellate authorities from unproductive stay matters and, thus, truly serves the laudable objectives behind the amendments, made with a view to reduce unnecessary legal proceedings and delays.
Another useful clarification is that once the appeal is decided in favour of the assessee, the amount of pre-deposit must be returned by the department, along with six per cent yearly interest, within 15 days from a date of request to that effect by way of a simple letter. The circular makes it clear that the refund should not be held up on the pretext that the department intends to file s further appeal against the decision or that the decision remands the case back to lower authorities.
CBEC makes it clear that 7.5 per cent of the amount (including duty and penalty) demanded in the order must be deposited for a first appeal and 10 per cent for a second appeal against the orders of appellate commissioners. This clarification is useful but does not seem in conformity with the wordings of the amendments. Also, whether the 7.5 per cent already deposited during the first appeal will be adjusted towards 10 per cent for a second appeal is not clear. This irritant should be sorted soon.
The circular details the procedures for making a pre-deposit and says the payment made during investigation or audit before filing the appeal will also be considered as the 7.5/10 per cent pre-deposit. And, in such cases, the date of filing the appeal will be deemed to be the date of deposit. Where the orders are in favour of the department, recovery proceedings need not be initiated if the orders are stayed at higher levels. Where the penalty amount alone is in dispute and penalties have been imposed under different provisions of the Act, the pre-deposit would be calculated based on the aggregate of all penalties imposed in the order against which appeal is proposed to be filed. In a case of non-payment or short payment of pre-deposit, the appeal is liable to be dismissed. The pre-deposit is necessary for appeals filed after August 6.
The latest instructions allow e-payment of the pre-deposit and gives procedures for reporting this in the monthly/quarterly returns. It would be helpful if the pre-deposit of duty is allowed to be made by debit to the Cenvat account.
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