2017 (6) TMI 1196 - AT - Service Tax

Pre-deposit - Section 35F (i) of the Central Excise Act, 1944 - whether mandatory deposit of seven and half percent as per Section 35F (i) of the Central Excise Act 1944, is required to be paid in cash or the same can be paid from CENVAT Credit Account maintained by the appellants? - Held that - it is not specifically mentioned that amount has to be deposited only by way of cash payment - the view taken by the First Appellate Authority, that deposit under Section 35F (i) cannot be made from CENVAT Credit Account, is not the correct appreciation of law so long as the CENVAT Credit is permissible for utilization as per Rule 3(4) of the CENVAT Credit Rules, 2004. Appeal filed by the appellants are allowed by way of remand to the First Appellate Authority with direction to decide the appeal on merits.

Summary

Issues: Interpretation of Section 35F of the Central Excise Act, 1944 regarding mandatory deposit for filing an appeal.

Analysis:
The appeal was filed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeal-II), Kolkata, which disposed of the appeal on the grounds that the mandatory deposit of duty required under Section 35F (i) of the Central Excise Act, 1944, had been paid from the CENVAT Account maintained by the appellants.

The appellant argued that there is no bar in the amended Section 35F, and the deposit must be made in cash, not from the CENVAT Credit Account. The Revenue, represented by a Superintendent, supported the findings of the First Appellate Authority.

The main issue in question was whether the mandatory deposit of seven and a half percent, as per Section 35F (i) of the Central Excise Act, 1944, should be paid in cash or could be paid from the CENVAT Credit Account maintained by the appellants. The relevant section was analyzed to determine the correct interpretation.

The Tribunal observed that the provision did not explicitly state that the amount must be deposited only in cash. It was noted that payments made from the CENVAT Credit Account were considered as due payments for the purpose of deposit under Section 35F. The Tribunal also considered Rule 3(4) of the CENVAT Credit Rules, 2004, which allows for the utilization of CENVAT Credit in certain situations.

Based on the above observations, the Tribunal concluded that the view taken by the First Appellate Authority, that the deposit under Section 35F (i) cannot be made from the CENVAT Credit Account, was not in accordance with the law. The appeal was allowed, and the case was remanded to the First Appellate Authority for a decision on the merits, with both parties given the opportunity to produce evidence in their favor.