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MANDATORY PRE-DEPOSIT

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 6-6-2015 - Finance Act, 2014 had substituted section 35F of the Central Excise Act to provide for deposit of certain percentage of duty demanded or penalty imposed or both before filing an appeal. All pending stay applications in relation to appeals filed prior to Finance Act, 2014 would continue to be governed by statutory provisions prevailing at the time of filling such stay applications/appeals. Impact of New section 35F The new provision of s .....

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In many cases, full waiver is granted. Such pre-deposit bears no interest and as such, Government may not be at loss. So far as appellant is concerned, it would save him from avoidable litigation atleast at stay stage and reduce time for disposal of appeal significantly. Then, 10% amount as pre-deposit is also nominal whereas Tribunals have been granting deposit of up to 100 per cent in many cases. The provision of section 35F was relevant when it was inserted in the Central Excise Act, 1944. W .....

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ho will suffer more, rather to the greatest extent without any danger to the Government revenue, since interest will be payable on duty demand up to the time, the appeal is finally decided by the Tribunal against the appellants. Whereas, if the appellant succeeds in CESTAT, they are only entitled for interest after 3 months from final disposal of case in their favour and no interest is allowed for the interim period i.e., from the date of payment against Stay order to 3 months from final disposa .....

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ection Order appealed against Appeal to Percentage of payable Authority 35(1) of CEA and 85 of Finance Act, 1994 Order-in-Original passed by Additional Commissioner / Joint Commissioner, or Deputy / Assistant Commissioner Commissioner 7.5% of demand / penalty Section 35F(i) of CEA 35B(1)(a) of CEA and 86 of Finance Act, 1994 Order-in-Original passed by Commissioner .....

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.8.2014 wherein is prescribed as a percentage of the duty demanded or penalty, as the case may be. The amended provision applies to appeals filed on or after 6.8.2014. As per the saving clause, all pending appeals / stay application filed till 5.8.2014 shall be governed by earlier provisions. An Act of Parliament comes into effect on the date it received the assent of the President of India. Hence, the amended provisions regarding filing of appeal along with stipulated percentage of pre-deposit .....

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covering the following aspects - Quantum of pre-deposit Payment made during investigation Recovery of amounts during pendency of appeal Refund of pre-deposit Procedure and manner of making pre-deposit Procedure for refund Preamble of adjudication / first appeal orders Cestat Circular (F. No. 15/Cestat/General / 2013-14) dated 28.08.2014 To remove confusion on adjustment of Cenvat credit against mandatory penalty, Cestat has clarified as follows (extracts): If the mandatory deposit of du .....

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Court order in CC v. Small Industries Development Bank of India 2014 (7) TMI 738 - GUJARAT HIGH COURT, Cestat had issued following instructions for dealing of cases of power of Tribunal regarding extending of stay beyond a period of 365 days - In the case of CC v. M/s. Small Industries Development Bank of India in Tax Appeal No. 341 of 2014 & Others, the Hon'ble High Court of Gujarat at Ahmedabad vide order dated 9-7-2014 [Commissioner Versus Small Industries Development Bank of India 2 .....

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ted- (1) To maintain two separate Registers viz (a) For cases wherein stay was granted by the Tribunal fully/partially. (b) For appeals in which no stay was granted. (2) Since the Hon'ble High Court of Gujarat further directed that the Appellate Tribunal must and shall give priority to appeals in which stay has been granted, continued and or extended, preference should be given for such cases while listing th .....

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ls while presenting appeals are expressing reluctance in compliance with the condition of mandatory deposit stipulated under the Act as amended. Some of them have contend that as the Show Cause Notice was issued and demand confirmed earlier to 6-8-2014, the amended provisions are not applicable to their case. Few of them have relied upon judgments of various judicial forums to claim exemption from the mandatory deposit while filing appeal. It is pertinent to mention that no such exemption has be .....

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f favourable order from Appellant Authority. This Circular clarifies on data base for refunds and pre-deposit in case of demand of erroneous drawback granted. Following extracts are relevant - 2. In order to maintain uniformity in the database being maintained, the following columns are suggested to be maintained in a separate register (e-register preferably) in the Review Cell of each Commissionerate. The following columns need to be filled in on receipt of each appeal memo as directed in Para .....

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