2016 (12) TMI 1163 - AT - Central Excise

Maintainability of appeal - mandatory deposit of duty required to be made under Section 35F (i) of the Central Excise Act, 1944 has been paid from the CENVAT Account maintained by the appellants - whether mandatory deposit of seven and half per cent 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 in section 35F, that amount has to be deposited only by way of cash payment. Rule 3(4) of CENVAT Credit Rules, 2004 says that In a case of dispute about admissibility of CENVAT Credit, ultimate action against an assessee, if found to be inadmissible to CENVAT Credit, will be to reverse CENVAT Credit taken. In such a case there may not be any need to make pre deposit in cash. Similarly, in the case of demand of duty, if CENVAT Credit is permissible for payment of tax, the same can always be debited from CENVAT Account of an assesse. As per procedure followed by CESTAT Registry at Kolkata, payments made from CENVAT Credit Account are considered as due payments for considering as deposit under Section 35F (ii) and (iii) of Central Excise Act, 1944. Thus, 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 utilisation as per Rule 3(4) of the CENVAT Credit Rules, 2004 - The appellants are allowed by way of remand to the First Appellate Authority with directions to decide the appeals on merits - Appeal allowed by way of remand.

Summary

Issues:

1. Interpretation of Section 35F (i) of the Central Excise Act, 1944 regarding the mandatory deposit of duty before filing an appeal.
2. Whether the deposit required under Section 35F (i) can be made from the CENVAT Credit Account maintained by the appellants.

Analysis:

1. The appeals were filed against Orders-in-Appeal dated 15/2/2016, where the First Appellate Authority disposed of the appeals stating that the mandatory deposit of duty under Section 35F (i) has been paid from the CENVAT Account. The appellants argued that the deposit should be made in cash and not from the CENVAT Credit Account. The Revenue supported the findings of the First Appellate Authority.

2. The issue revolved around whether the mandatory deposit of duty, 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. The relevant section required a deposit of seven and a half per cent of the duty or penalty in dispute before filing an appeal. The First Appellate Authority discussed the CENVAT Credit Rules, stating that if CENVAT Credit is permissible for payment of tax, it can be debited from the CENVAT Account. The Authority considered payments made from the CENVAT Credit Account as due payments for the purpose of Section 35F.

3. The Tribunal observed that the law does not specify that the deposit must be made only in cash. It was noted that if CENVAT Credit is permissible for utilization as per the CENVAT Credit Rules, the deposit can be made from the CENVAT Credit Account. The Tribunal disagreed with the First Appellate Authority's view that the deposit cannot be made from the CENVAT Credit Account. The appeals were allowed, and the case was remanded to the First Appellate Authority for a decision on merits.

In conclusion, the Tribunal clarified that the mandatory deposit under Section 35F (i) of the Central Excise Act 1944 can be made from the CENVAT Credit Account if permissible under the rules. The judgment emphasized the importance of interpreting the law correctly and allowing appeals to be decided on their merits.