The Pre-deposit computation
IN our Budget analysis, every third article had something or the other regarding the trials and tribulations associated with the proposal in the Finance (No.2) Bill, 2014 of prescribing a mandatory pre-deposit.
The proposed section is extracted below -
"35F. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,-
(i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise;
(ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against;
(iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against:
Provided that the amount required to be deposited under this section shall not exceed rupees ten crores:
Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014.
Whereas some quibbled over the usage of the word "another" in the TRU letter 334/15/2014-TRU dated 10.07.2014 as being a figment of imagination of the author and that the said usage would imply that an appellant would be required to pay 7.5 % + 10 % = 17.5% when they prefer an appeal before the Tribunal in the second stage of appeal proceedings, others said that in the second stage of appeal, the appellant should be paying only 2.5 % of the duty or penalty as 7.5 % has already been paid.
The Board prefers to maintain a stoic silence over the issue and perhaps is laughing at all these interpretations because it wants the bill to be enacted in the first place.
Be that as it may, some experts also feel that there is a grey area in the matter of the amount of compulsory pre-deposit for entertainment of second appeal when the first appellate authority grants relief on one count but confirms order of the adjudicating authority on another count. The question being asked is - Whether pre-deposit would be determined on the basis of demand confirmed in the original order or that confirmed in the order-in-appeal?
DDT feels that the usage of the words - "in pursuance of the decision or order appealed against:" in all the three clauses clinches the issue.
Suffice to say that the "duty or penalty" confirmed in the order-in-original or the order-in-appeal is what determines the quantum of pre-deposit when an appeal is preferred before the Commissioner (Appeals) or the CESTAT respectively.