CBEC clarification on pre-deposit for demand of drawback granted earlier

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The mandatory pre-deposit before filing an appeal before first/second
appellate authority under excise & customs was applicable w.e.f. 6th
Aug’14(i.e. date of enactment of Finance Act (no. 2), 2014). 
The ambiguity arose as to whether the cases involving demand of drawback
erroneously granted earlier, would also get covered under the newly inserted
provisions or not.  
Trade & industry submitted to CBEC that the drawback is not a duty
and hence should not be governed by the provisions of mandatory pre-deposit.
 


Setting aside the said representations, it has now
been clarified by CBEC, vide Circular no. 993/17/2014-CX dated 5th
Jan’15, that the requirement of mandatory pre-deposit (post 6th aug’14) would
be applicable even in cases of demand of drawback erroneously granted, rebate
& baggage, since drawback is nothing but the refund of duty suffered on
export of goods. 
However, in case of revision applications before Joint Secretary u/s
129DD of Customs Act, the requirement of pre-deposit doesn’t arise. The
aforesaid circular has been given hereunder for ease of reference.
F. No.
390/Budget/1/2012-JC
Government of India
Ministry of Finance
Department
of Revenue
(Central
Board of Excise & Customs)
Circular
No. 993/17/2014-CX
New
Delhi, dated the 5th January, 2015
To,
1. All Principal Chief Commissioners, Central Excise & Service Tax/Customs
2. All Chief Commissioners, Central Excise and Service Tax/ Customs.
3. Chief Commissioner (AR), CESTAT, New Delhi.
4. All Principal Commissioners of Central Excise & Service
Tax/Customs.
5. All Commissioners of Central Excise, Service Tax and Customs
6. All Commissioners (AR), New Delhi, Mumbai, Chennai, Kolkata,
Bangalore & Ahmadabad
7. Webmaster
Sub:
Mandatory pre-deposit of duty or penalty for filing appeal– reg.
Attention is invited to Circular No 984/08/2014-CX dated 16th September,
2014 on the captioned subject. While para 6 of this Circular laid down the
procedure and manner of refund, para 7.2 clearly directed that the
Commissionerates should maintain a database of the record of deposits made 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.
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 6.2 of the Circular mentioned above. The data should be
maintained separately in respect of appeals before CESTAT and Commissioner
(Appeals)-
(i) Sl. No.
(ii) Name of the Appellant/ Party
(iii) Details of duty paying document viz Challan etc
(iv) Amount of pre-deposit paid
(v) Order No and date of the order of Commissioner(A)/Tribunal
3. Rule 17 of the CESTAT (procedure) Rules, 1982 stipulates that a copy
of the appeal memo is to be sent to the Departmental Representative as well as to the
Executive Commissionerate. This is required to be done by the Tribunal registry
where
the appeal memo is received. It has been brought to the notice of the
Board that appeals filed before the Tribunal on or after 6th August are
not being sent to the Commissionerate. Therefore, it is emphasized that Rule 17
ibid has to be followed and the Tribunal Registry must send a copy of the
appeal memo to the Commissionerate immediately after receipt. Similarly, a copy
of the appeal memorandum filed before the Commissioner (Appeal) must be sent to
the Commissionerate concerned by the office of the Commissioner (Appeals). This
would help in processing the refund claims quickly.
4. Para 1.2 of the Circular ibid stated that amended provisions would
apply to appeals filed after 6th of August, 2014. An Act of Parliament comes in
to 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 shall apply to all appeals filed on or after 6th
August, 2014. Para 1.2 of the earlier Circular stands suitably modified.
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).
(Archana P Tiwari)

Joint Secretary (Judicial/Review)
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