CE/Customs/Service Tax - New Appeal Provisions - CBEC issues clarifications - Additional 10 percent for second appeal; No recovery during the pendency of appeal.
THE new appeal provisions as per the Finance Act 2014 came into effect from 6th August 2014. After a month and ten days, the CBEC has come out with some clarifications which were crying for attention of the Board. But as they say better late than never.
Quantum of pre-deposit for appeal to Tribunal from Commissioner (Appeals) - pay additional 10 percent: As per the amended provisions, a pre-deposit of 10 percent is to be made for an appeal to the Tribunal against an order of a Commissioner (Appeals). While appealing to the Commissioner (Appeals), an amount of 7.5 percent of the duty/penalty must have already been deposited. Now the doubt is whether the 10 percent deposit for appeal to the Tribunal is in addition to the 7.5 percent already deposited or is it inclusive of that?
In - 11.07.2014, we had raised this doubt - "There is a doubt on payment of another 10 percent for the second appeal. Though the TRU letter states that another 10 percent, the amendment does not say so clearly. So, there is a doubt whether the pre-deposit at the second appellate stage is 10 percent or 17.5 percent. Even if it is 17.5 percent, what will happen to the 7.5% deposited with the Commissioner (A)?. Shouldn't that also be considered as pre-deposit? This also needs clarification statutorily."
Though the Government did not make any statutory clarification, the Board has now issued a circular which clarifies: "It is, therefore, clarified that in the event of appeal against the order of Commissioner (Appeal) before the Tribunal, 10% is to be paid on the amount of duty demanded or penalty imposed by the Commissioner (Appeal). This need not be the same as the amount of duty demanded or penalty imposed in the Order-in-Original in the said case.”
There is absolutely no doubt about this, but the doubt is what happens to the 7.5 percent already deposited? Will it be refunded? When the order of the lower authority merges with the order of the Commissioner (Appeals), and the appellant is required to pay 10 of the duty determined by the Commissioner (Appeals), where is the question of retaining the 7.5 percent with the Department?
In any case, this is not for the Board to decide; if this was their intention, they should have made it clear in the Law passed by Parliament. The Board is not a super parliament which can add to the legislation, its own belated wisdom.
This will be an issue for litigation in CESTAT as well as several High Courts and eventually the Supreme Court.
Payment made during investigation: Board clarifies that payment made during investigation or audit prior to filing the appeal will also be considered as the 7.5/10 percent pre-deposit. Thank you!
Board further clarifies that in case of any short-payment or non-payment of the amount stipulated under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962, the appeal filed by the appellant is liable for rejection. Is it not for the appellate authority to decide? Can the Board impose its views on the appellate authorities, especially the Tribunal?
No Recovery during pendency of appeal: This is the best clarification ever to come: In DDT 2394 - 11.07.2014, we reported, "Many of our distinguished contributing authors have expressed a fear that, notwithstanding the amendment, Department can still proceed with recovery as the pre-deposit is only a pre condition for appeal and not a stay against recovery. Let us hope when the Bill is enacted, it would be statutorily clarified that no recovery proceedings can be initiated when the appeal is pending."
Though not statutorily, Board has now clarified that:
We can all heave a sigh of relief that the menacing mandarins of the Department will not descend on unsuspecting assessees from December onwards threatening to recover demands made in cases pending with the Tribunal. Appellate Authorities are also liberated from the unproductive Stay matters and can now concentrate on final matters. CBEC deserves kudos for this very liberal and fair clarification, which will change the very appellate mechanism of the Department.
Refund of pre-deposit in 15 days; on a simple letter; even in Remand cases: good things continue…
Board clarifies:
1. in all cases where the appellate authority has decided the matter in favour of the appellant, refund with interest should be paid to the appellant within 15 days of the receipt of the letter of the appellant seeking refund, irrespective of whether order of the appellate authority is proposed to be challenged by the Department or not.
2. If the Department contemplates appeal against the order of the Commissioner (A) or the order of CESTAT, which is in favour of the appellant, refund along with interest would still be payable unless such order is stayed by a competent Appellate Authority.
3. In the event of a remand, refund of the pre-deposit shall be payable along with interest.
The attitude of the Board towards the taxpayer seems to have undergone a major change - we hope it continues.
CBEC Circular No. 984/08/2014-CX., Dated: September 16, 2014