The new Pre-deposit conundrum
AS we know, for appeals filed before the CESTAT with effect from 6.8.2014, a mandatory pre-deposit of 7.5% of the demand (subject to a ceiling of ten crore rupees) has to be made.
In this case before the Tribunal, an order-in-original was passed by the CCE, Aurangabad on 30.05.2014.
By the time the appellant filed an appeal before the CESTAT, the new section 35F of the CEA, 1944, as substituted by the Finance Act, 2014 w.e.f 06.08.2014 had come into existence.
Presumably, no deposit of the percentage of duty/penalty as specified in section 35F was made by the appellant while filing the appeals and, therefore, the appeals were listed for their maintainability.
The appellants contended that although a show-cause notice had been issued but the impugned order was passed without following the principles of natural justice and, therefore, the matter ought to be remanded back to the adjudicating authority, by setting aside the impugned order, to hear the appeal on merits.
The Bench observed -
"4.As per the provisions of Section 35F of Central Excise Act, 1944 as amended in Finance Act, 2014, there is a mandatory requirement of pre-deposit of 7.5% of duty/penalty confirmed by way of impugned order. As statutory requirement has not been fulfilled by the appellants, we are not required to go into the merits of the case. Accordingly, the appeals are dismissed as non-maintainable."
If the appellants now make the pre-deposit as mandated in section 35F of CEA, 1944 can they file an appeal again with an application for COD? Would such an application/appeal be entertained? Or is an appeal before the High Court the only alternative? Nonetheless, the fact of the matter is that it gives weightage to that school of thought which says that the new section 35F should provide exceptions covering such situations.
Please see
We came across another case in which a Commissioner passed an order on demanding 1.87 crore from an importer and 2.14 crore from another one on 25.7.2014.
The issue involved has been referred to a Larger Bench by another Division Bench of the Tribunal. If the appeal was filed before 6.8.2014, they could have got full waiver of pre-deposit.
But now the Tribunal dismissed the appeal itself, as mandatory pre-deposit was not paid.