2017 (9) TMI 1477 - AT - Central Excise

Pre-deposit - 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 appellant? - Held that - provisions of section 35 does 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 u/s 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 CCR, 2004 - appeal filed by the appellant is allowed by way of remand to the ld. Commissioner(Appeals) to decide the appeal on merits without insisting on any further pre-deposit - appeal allowed by way of remand.

Summary

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

Analysis:
The appellant filed an appeal against an Order-in-Appeal passed by the Commissioner(Appeal-I) of Central Excise, Kolkata, which disposed of all appeals on the ground that the mandatory deposit required under Section 35F (i) of the Central Excise Act, 1944 had been paid from the CENVAT Account. The appellant argued that the deposit could be made from the CENVAT Credit Account and was not limited to cash payments only. The Revenue supported the findings of the First Appellate Authority. The issue before the Tribunal was whether the mandatory deposit of seven and a half percent, as per Section 35F (i), had to be paid in cash or could be paid from the CENVAT Credit Account maintained by the appellant.

Upon reviewing the case records and relevant provisions, the Tribunal noted that Section 35F did not explicitly state that the deposit had to be made in cash. The Tribunal considered Rule 3(4) of the CENVAT Credit Rules, 2004, which allowed for the utilization of CENVAT Credit in certain situations. It was observed that if CENVAT Credit was found inadmissible, the ultimate action would be to reverse the credit, eliminating the need for a cash deposit. Similarly, if CENVAT Credit could be used for duty payment, it could be debited from the account. The Tribunal also highlighted that payments made from the CENVAT Credit Account were considered as due payments for the purpose of deposit under Section 35F (ii) and (iii) of the Central Excise Act, 1944. The Tribunal concluded that the First Appellate Authority's view that the deposit could not be made from the CENVAT Credit Account was incorrect as long as the credit was permissible for utilization under Rule 3(4) of the CENVAT Credit Rules, 2004.

Therefore, the Tribunal allowed the appeal by remanding the case to the Commissioner(Appeals) for a decision on the merits without requiring any further pre-deposit. The appellant was granted an opportunity to present their case, and both parties could produce evidence in their favor. The operative part of the order was pronounced in the open court, and the appeal was allowed by way of remand.