2012 (1) TMI 127 - AT - Central Excise

Wrong availment of CENVAT Credit - contravention of Rule 3 of Cenvat Credit Rules readwith Rule 7 of the Cenvat Credit Rules - Held that - Commissioner (Appeals) in this case has held that amount deposited in terms of Section 35F of the Central Excise Act, 1944 as pre-deposit cannot be considered as payment of duty. He held that since the pre-deposit is not a duty question of taking of Cenvat credit of the pre-deposit does not arise. We find that in the assessee s own case 2013 (9) TMI 378 - CESTAT NEW DELHI , this Tribunal has already taken a view that the Cenvat credit of pre-deposit of duty paid under Section 35F of the Central Excise Act can be availed and the demand confirmed on this account is not sustainable - Cenvat credit of the pre-deposit made under Section 35F of Central Excise Act is admissible to the appellant - Decided against Revenue.

Summary

Issues:
- Whether pre-deposit made in pursuance of the CESTAT Stay order can be taken as Cenvat credit?
- Whether the pre-deposit under Section 35F of the Central Excise Act can be considered as payment of duty for the purpose of availing Cenvat credit?

Analysis:
1. Issue 1 - Pre-deposit as Cenvat credit:
The case involved appeals by M/s. Hindustan Zinc Limited and the Revenue against a common order regarding the utilization of Cenvat credit. The assessee had taken Cenvat credit against supplementary invoices issued in relation to a pre-deposit made under a CESTAT Stay order. The Department alleged that this action contravened Cenvat Credit Rules. The Additional Commissioner confirmed the duty and imposed penalties, which were partly set aside by the Commissioner (Appeals). The advocate for the assessee argued that a similar issue had been decided in their favor by the Tribunal previously. The Tribunal, after considering both sides, referred to its earlier decision and held that Cenvat credit of pre-deposit made under Section 35F of the Central Excise Act is admissible. Consequently, the appeal of the assessee was allowed, and the Revenue's appeal was dismissed.

2. Issue 2 - Pre-deposit as payment of duty:
The crux of the matter was whether the pre-deposit under Section 35F of the Central Excise Act could be considered as payment of duty for the purpose of availing Cenvat credit. The Commissioner (Appeals) had held that the pre-deposit cannot be deemed as duty payment, thus rejecting the claim for Cenvat credit. However, the Tribunal, based on its previous ruling, determined that the Cenvat credit of pre-deposit made under Section 35F is permissible. This decision was crucial in allowing the appeal of the assessee and dismissing the Revenue's appeal. The Tribunal's interpretation clarified the admissibility of Cenvat credit in such cases, emphasizing the legal validity of utilizing pre-deposits for credit purposes under the Central Excise Act.

In conclusion, the judgment by the Appellate Tribunal CESTAT NEW DELHI addressed the issues of pre-deposit as Cenvat credit and the nature of pre-deposit under Section 35F of the Central Excise Act. By referencing its prior decision, the Tribunal established the admissibility of Cenvat credit for pre-deposits, leading to the allowance of the assessee's appeal and the dismissal of the Revenue's appeal. This ruling provided clarity on the utilization of pre-deposits for credit purposes, ensuring compliance with the relevant legal provisions and setting a precedent for similar cases in the future.