Whether predeposit is required in case of appeal when there is no demand of duty

[R N Desai]

Dear Experts,

We are 100% EOU. Rule 5 of the CCR, 2004 provides for the refund of Cenvat credit if the manufacturer is unable to utilize the credit accumulated on account of export. Such refund is subject to the safeguards, conditions and limitations as provided vide Notification No. 27/2012-CE (NT) dated 18.06.2012. As per para 2(h) of the said Notification, claimant is required to debit the duty amount from the Cenvat account at the time of filling refund claim. Accordingly, we had debited the duty amount and filed refund claim. The claim was rejected by the Assistant Commissioner. Being aggrieved by the said rejection order, we filled an appeal before the Commissioner (Appeals). Now, we have been informed by the office of the Commissioner (Appeal) that as per Section 35F read with Circular No. 984/08/2014-CX dated 16/09/2014 and Circular No. 993/17/2014-CX dated 05/01/2015, we should deposit 7.5% otherwise the appeal would not be entertained. As per Section 35F, assessee is required to deposit 7.5% of the duty and penalty. In our case as there is no demand of duty or penalty, are we required to deposit 7.5%?

AI Summary

Pre-deposit requirement can be imposed in refund or rebate appeals even when no duty demand exists.
The central operative issue is whether a pre-deposit is required when appealing against rejection of a refund claim where there is no duty demand. The department, invoking pre-deposit rules and administrative circulars, treats refund/rebate appeals as subject to pre-deposit obligations. Countervailing submissions contend the circulars apply only when a previously sanctioned refund/drawback is followed by a recovery demand; absent any demand and where the refund was rejected, no pre-deposit should be necessary.