Circular No 984/08/2014-CX
F. No. 390/Budget/1/2012-JC
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
New Delhi, dated the 16th September, 2014
To,
1. All Chief Commissioners, Central Excise and Service Tax/ Customs.
2. All Commissioners of Central Excise, Service Tax/ Customs.
3. Chief Commissioner (AR), CESTAT, New Delhi.
5. All Commissioners of Central Excise, Service Tax and Customs
6. All Commissioners (AR), New Delhi, Mumbai, Chennai, Kolkata, Bangalore &
Ahmadabad
7. Webmaster
Sub: Amendments to the Appeal provisions in Customs, Central
Excise and Service Tax made by Finance Act, 2014- Issue of clarifications – reg.
Sir / Madam,
The Finance Act (No.2), 2014 has been enacted on 06.08.2014. Section 35F of the
Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 have been
substituted with new sections to prescribe mandatory pre-deposit as a percentage
of the duty demanded where duty demanded is in dispute or where duty demanded
and penalty levied are in dispute. Where penalty alone is in dispute, the
pre-deposit shall be calculated on the penalty imposed.
1.2 The amended provisions apply to appeals filed after 6th August, 2014.
Sections 35F of the Central Excise Act, 1944 and Section 129E of the Customs
Act, 1962 contain specific saving clause to state that all pending appeals/stay
applications filed till the enactment of the Finance Bill shall be governed by
the erstwhile provisions.
1.3 Section 35FF of the Central Excise Act, 1944 and Section 129EE of the
Customs Act, 1962 have also been substituted to provide for payment of refund
along with interest at the prescribed rate on the amount pre-deposited from the
date of such payment till the date of refund. In exercise of the powers
conferred under the new Section 35FF of the Central Excise Act, 1944 and Section
129EE of the Customs Act, Notification Nos 24/2014-CE(NT) and 70/2014-Cus(NT),
both dated 12.08.2014 have been issued specifying six percent as rate of
interest on refunds made under those sections.
1.4 Various doubts / issues have been raised by trade bodies, industry
associations and field formations etc. on the implementation of the new
provisions. With a view to implement the scheme smoothly, the following
clarifications are issued.
2. Quantum of pre-deposit in terms of Section 35F of Central Excise Act, 1944
and Section 129E of the Customs Act, 1962:
2.1 Doubts have been expressed with regard to the amount to be deposited in
terms of the amended provisions while filing appeal against the order of
Commissioner (Appeals) before the CESTAT. Sub-section (iii) of Section 35F of
the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 stipulate
payment of 10% of the duty or penalty payable in pursuance of the decision or
order being appealed against i.e. the order of Commissioner (Appeal). 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.
2.2 In a case, where penalty alone is in dispute and penalties have been imposed
under different provisions of the Act, the pre-deposit would be calculated based
on the aggregate of all penalties imposed in the order against which appeal is
proposed to be filed.
2.3 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 is liable for rejection.
3. Payment made during investigation:
3.1 Payment made during the course of investigation or audit, prior to the date
on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of
Rs 10 crores, can be considered to be deposit made towards fulfillment of
stipulation under Section 35F of the Central Excise Act, 1944 or Section 129E of
the Customs Act, 1962. Any shortfall from the amount stipulated under these
sections shall have to be paid before filing of appeal before the appellate
authority. As a corollary, amounts paid over and above the amounts stipulated
under Section 35 F of the Central Excise Act, 1944 or Section 129E of the
Customs Act, 1962, shall not be treated as deposit under the said sections.
3.2 Since the amount paid during investigation/audit takes the colour of deposit
under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs
Act, 1962 only when the appeal is filed, the date of filing of appeal shall be
deemed to be the date of deposit made in terms of the said sections.
3.3 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.
4. Recovery of the Amounts during the Pendency of Appeal:
4.1 Vide Circular No.967/1/2013 dated 1st January, 2013, Board has issued
detailed instructions with regard to recovery of the amounts due to the
Government during the pendency of stay applications or appeals with the
appellate authority. This Circular would not apply to cases where appeal is
filed after the enactment of the amended Section 35F of the Central Excise Act,
1944 or Section 129E of the Customs Act, 1962.
4.2 No coercive measures for the recovery of balance amount i.e., the amount in
excess of 7.5% or 10% deposited in terms of Section 35F of Central Excise Act,
1944 or Section 129E of Customs Act, 1962, shall be taken during the pendency of
appeal where the party / assessee shows to the jurisdictional authorities:
(i) proof of payment of stipulated amount as pre-deposit of 7.5% / 10%, subject
to a limit of Rs.10 crores, as the case may be; and
(ii) the copy of appeal memo filed with the appellate authority.
4.3 Recovery action, if any, can be initiated only after the disposal of the
case by the Commissioner (Appeal) / Tribunal in favour of the Department. For
example, if the Tribunal decides a case in favour of the Department, recovery
action for the amount over and above the amount deposited under the provisions
of Section 35F / 129E may be initiated unless the order of the Tribunal is
stayed by the High Court/Supreme court. The recovery, in such cases, would
include the interest, at the specified rate, from the date duty became payable,
till the date of payment.
5. Refund of pre-deposit:
5.1 Where the appeal is decided in favour of the party / assessee, he shall be
entitled to refund of the amount deposited along with the interest at the
prescribed rate from the date of making the deposit to the date of refund in
terms of Section 35FF of the Central Excise Act, 1944 or Section 129EE of the
Customs Act, 1962.
5.2 Pre-deposit for filing appeal is not payment of duty. Hence, refund of
pre-deposit need not be subjected to the process of refund of duty under Section
11B of the Central Excise Act, 1944 or Section 27 of the Customs Act, 1962.
Therefore, 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.
5.3 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.
5.4 In the event of a remand, refund of the pre-deposit shall be payable along
with interest.
5.5 In case of partial remand where a portion of the duty is confirmed, it may
be ensured that the duty due to the Government on the portion of order in favour
of the revenue is collected by adjusting the deposited amount along with
interest.
5.6. It is reiterated that refund of pre-deposit made should not be withheld on
the ground that Department is proposing to file an appeal or has filed an appeal
against the order granting relief to the party. Jurisdictional Commissioner
should ensure that refund of deposit made for hearing the appeal should be paid
within the stipulated time of 15 days as per para 5.2 supra.
6. Procedure and Manner of making the pre-deposits:
6.1 E-payment facility can be made use of by the appellants, wherever possible.
6.2 A self attested copy of the document showing satisfactory proof of payment
shall be submitted before the appellate authority as proof of payment made in
terms of Section 35F of the Central Excise Act, 1944 or Section 129E of the
Customs Act, 1962.
6.3 Column 7 of EA.1, column 6 of CA.1 and column 6 of ST.4 for filing appeal
before Commissioner (Appeals), seek details of the duty/penalty deposited. The
same may be used for indicating the deposits made under amended Section 35F of
the Central Excise Act, 1944 or section 129E of the Customs Act, 1962.
6.4 The appeal filed before the CESTAT are filed along with the appeal memo in
prescribed format (Form EA-3 for Central Excise Appeals and Form CA-3 for the
Customs Appeals). Column 14(i) of the said appeal forms seeks information of
payment of duty, fine, penalty, interest along with proof of payment (challan).
These columns may, therefore, be used for the purpose of indicating the amount
of deposit made, which shall be verified by the appellate authority before
registering the appeal.
6.5 As per existing instructions, a copy of the appeal memo along with proof of
deposit made shall be filed with the jurisdictional officers.
7. Procedure for refund:
7.1 A simple letter from the person who has made such deposit, requesting for
return of the said amount, along with a self attested Xerox copy of the order in
appeal or the CESTAT order consequent to which the deposit becomes returnable
and attested Xerox copy of the document evidencing payment of such deposit,
addressed to Jurisdictional Assistant/Deputy Commissioner of Central Excise and
Service Tax or the Assistant/Deputy Commissioner of Customs, as the case may be,
would suffice for refund of the amount deposited along with interest at the rate
specified.
7.2 Record of deposits made under Section 35F of the Central Excise Act, 1944 or
section 129E of the Customs Act, 1962 should be maintained by the
Commissionerate so as to facilitate seamless verification of the deposits at the
time of processing the refund claims made in case of favourable order from the
Appellate Authority.
8. Amendment to Preamble of Orders:
8.1 In order to make the new provisions known to the assessee / trade every
adjudicating authority lower in rank to the Commissioner is directed to
incorporate the following sentence in the Preamble to the order being issued by
them –
“An appeal against this order shall lie before the Commissioner (Appeal) on
payment of 7.5% of the duty demanded where duty or duty and penalty are in
dispute or penalty, are in dispute or penalty, where penalty alone is in
dispute. ”
8.2 The following may be added in the preamble of the orders issued by the
Commissioner (Appeals) –
“An appeal against this order shall lie before the Tribunal on payment of 10% of
the duty demanded where duty or duty and penalty are in dispute, or penalty,
where penalty alone is in dispute”.
8.3 The following may be added in the preamble of the orders issued by the
Commissioner as original adjudicating authority –
“An appeal against this order shall lie before the Tribunal on payment of 7.5%
of the duty demanded where duty or duty and penalty are in dispute, or penalty,
where penalty alone is in dispute”.
9. Receipt of the Circular may please be acknowledged.
10. Hindi version follows.
(Sunil K. Sinha )
Director (Judicial Cell)
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