2017 (9) TMI 1554 - AT - Central Excise

Pre-deposit - amount paid from un-utilized CENVAT credit account maintained by the appellant - whether the mandatory deposit of 7.5% as per Section 35F (i) of the Central Excise Act is required to be made in cash or the same can be paid by utilizing CENVAT credit account maintained by the appellant? - Held that - in section 35 it is not specifically mentioned that amount has to be deposited only by way of cash payment - the view taken by the lower appellate authority that the deposit u/s 35F (i) cannot be made from CENVAT credit account, is not correct interpretation of law as long as the CENVAT credit is permitted for utilization under Rule 3 (4) of the CCR, 2004 - matter remitted to the ld.Commissioner (Appeals) for re-considering the case on merit - appeal allowed by way of remand.

Summary

Issues involved: Interpretation of Section 35F (i) of the Central Excise Act regarding mandatory pre-deposit of duty for filing an appeal - Whether the deposit can be made in cash only or by utilizing CENVAT credit account.

Analysis:

The appeal was filed against the Order-in-Appeal dated 15.03.2016, where the lower appellate authority disposed of the appeal stating that the mandatory pre-deposit of duty required under Section 35F (i) of the Central Excise Act had been paid from the appellant's un-utilized CENVAT credit account. The appellant argued that there is no bar for amending Section 35F to require cash deposit only, not utilizing the CENVAT credit account. The Revenue supported the findings of the lower appellate authority. The issue revolved around whether the mandatory deposit of 7.5% as per Section 35F (i) needed to be made in cash or could be paid by utilizing the CENVAT credit account. The Tribunal observed that the provision did not specify that the amount had to be deposited only in cash. The lower appellate authority discussed the Cenvat Credit Rules, indicating situations where CENVAT credit could be utilized. It was noted that if CENVAT credit was permissible for payment of duty, it could be debited from the CENVAT account. The Tribunal found that the lower appellate authority's view that the deposit under Section 35F (i) could not be made from the CENVAT credit account was not a correct interpretation of the law as long as CENVAT credit was permitted for utilization under the rules. The Tribunal directed the Commissioner (Appeals) to decide the issue on merit without insisting on any further pre-deposit from the appellant, setting aside the impugned order and remitting the matter for reconsideration on merit, granting the appellant a reasonable opportunity to present their case. The appeal was allowed by way of remand.