Delhi HC sets aside order of CESTAT Larger Bench which had ruled on quantum of pre-deposit as mandated u/s 35F of Central Excise Act and Section 129E of Customs Act, holds that 10% would not be in addition to and over 7.5% of pre-deposit made for first appeal.
HC observes that an appeal, whether first or second, is a continuation of original proceedings but such substantive right created by the statute can be circumscribed by conditions imposed by Legislature, including condition of pre-deposit; “Language of Section 35F of the C.E. Act is unchallenging and meaning of words and conditions placed is plain and lucid….Intent as cogently reflected in simple words is that the assessee on second appeal should pre-deposit 10% of the total tax and penalty subject matter of the appeal. It is not to ignore the pre-deposit of 7.5% already made to file first appeal…”, states HC.
Further it observes that “There is logic in increasing pre-deposit by 2.5% when second appeal is filed, but we would be adding words to the plain and unambiguous provision if we stipulate that 10% pre-deposit will be over and above 7.5%…”; Expression or words 17.5% or an additional 10% deposit instead of using mere 10% pre-deposit have not been used, notes HC and in this context, refers to SC decisions in Lakshmi Ammal and Gujarat State Financial Corporation on strict construction of statutes relating to Court fee and charging section of tax enactments, as well as Circular No. 984/08/2014-CX dated September 16, 2014.
On the other hand, finds it difficult to accept Kolkata CESTAT’s reasoning in Hindalco Industries Limited & Ors. that assessee would not be at loss even if they were asked to pay an additional amount of 10%, for the amount would be refunded with applicable interest in case they succeed; Resultantly, directs that assessee and others on filing second appeal before CESTAT are required to deposit 10% of amount of duty / penalty as confirmed by the first appellate authority inclusive of 7.5% pre-deposit made for first appeal.
However, HC rejects assessee’s contention that Section 35F does not apply to service tax appeals and therefore, no pre-deposit is required to be made.
It observes that Section 86 of Finance Act provides for an appeal before Tribunal and Section 83 makes Section 35F equally applicable to service tax appeals, accepting assessee’s interpretation would render a part of Section 83 referring to Section 35F altogether otiose and redundant; States, “…this is a case of reference or citation, therefore, the amended provisions of Section 35F would apply, as it is specifically stipulated in Section 83 of the Finance Act that relevant provisions of C.E. Act indicated therein as in force from time to time will apply…”
Citation: [TS-211-HC-2018(DEL)-EXC]