Mandatory pre-deposit of duty or penalty for filing appeal

[Naveed S]

Mandatory pre-deposit of duty or penalty for filing appeal– reg.

The Central Excise and Customs Board has recently issued a circular no. 993/17/2014 - CX dated 05.01.2015 for providing proper procedure for purpose of maintaining a database of the record of deposits made by assessee. The reason for maintaining such database is to avoid seamless verification of the deposits at the time of processing the refund claims made in case of favourable order from the Appellate Authority.

It is quite heartening that Board has issued above instructions for adopting uniformity in maintaining such database so as to facilitate speedy and quick disposal of such refund claims filed by the appellants. It has also been instructed that the data for deposits made should be maintained separately in respect of appeals before CESTAT and Commissioner (Appeals).

Further, in the said circular, a clarification has also been provided regarding insistence by the Commissioners (Appeals) for pre-deposit in cases for demand of erroneous drawback granted to the assessee, as detailed below :-

5. Several representations have been received by the Board stating that some Commissioners (Appeals) have been insisting on pre-deposit in cases of demand of erroneous drawback granted. It has been represented that drawback is not a duty and hence the amended provisions would not apply to such cases.

6. The issue has been examined. Drawback, like rebate in Central Excise, is refund of duty suffered on the export goods. Section 129E stipulates that appellant filing appeal before the Commissioner (Appeals) shall pay 7.5% of the duty demanded where duty and penalty are in dispute. Accordingly, it is clarified that mandatory pre-deposit would be payable in cases of demand of drawback as the new section 129E would apply to such cases.

7. The ambit of the Section 129E of the Customs Act, 1962 in the legislation does not extend to appeals under section 129DD before Joint Secretary (Revision Application). Therefore, while mandatory pre-deposit would be required to be paid in cases of drawback, rebate and baggage at the first stage appeal before Commissioner(Appeals), no pre-deposit would be payable in such cases while filing appeal before the JS(RA).

In view of above, it is now confirmed that at the time of filing first stage appeal before Commissioner (Appeals), a pre-deposit of 7.5 % of the duty demanded is to be compulsorily deposited even if cases pertain not only to drawback but also for rebate and baggage.