2016 (12) TMI 1168 - 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: Interpretation of Section 35F of the Central Excise Act regarding mandatory deposit for filing an appeal.

Analysis:
The appellant filed an appeal against Order-in-Appeal No. 14/HAL/2016 passed by the Commissioner of Central Excise (Appeal-I), Kolkata, which required a mandatory deposit under Section 35F (i) of the Central Excise Act, 1944. The first Appellate Authority disposed of the appeal stating that the deposit had been made from the CENVAT Account. The appellant argued that the deposit should be made in cash, not from the CENVAT Credit Account. The Revenue supported the findings of the First Appellate Authority. The issue revolved around whether the mandatory deposit of seven and a half per cent, as per Section 35F (i), needed to be paid in cash or could be paid from the CENVAT Credit Account. The Tribunal analyzed the relevant provisions and observed that there was no specific requirement for cash payment. It was noted that CENVAT Credit could be utilized in certain situations, and payments made from the CENVAT Credit Account were considered as due payments for deposit under Section 35F. The Tribunal concluded that the deposit could be made from the CENVAT Credit Account if permissible under the CENVAT Credit Rules. Therefore, the appeal was allowed, and the case was remanded to the First Appellate Authority for a decision on the merits, as per the correct interpretation of the law.