2018 (8) TMI 396 - AT - Central Excise

Pre-deposit - utilization of CENVAT Credit account for payment of 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 case or the same can be paid from Cenvat Credit Account maintained by the appellant? Held that - In Section 35F, it is not specifically mentioned that amount has to be deposited only by way of cash payment - 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. 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 utilization as per Rule 3(4) of the Cenvat Credit Rules, 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.

Summary

Issues involved:
- Interpretation of Section 35F of the Central Excise Act, 1944 regarding mandatory deposit for filing an appeal
- Whether the mandatory deposit can be made from the CENVAT Credit account
- Compliance with Circulars and judicial precedents regarding the mode of deposit for appeals

Analysis:
1. The case involved a dispute regarding the mandatory deposit required for filing an appeal under Section 35F of the Central Excise Act, 1944. The appellant had made a deposit through their CENVAT Credit balance, which was contested by the department.

2. The appellant argued that Section 35F does not specify that the deposit must be made from the PLA alone. They cited a Circular and a judgment of the Hon'ble Jharkhand High Court to support their position that the deposit can be made from the CENVAT Credit account.

3. The Commissioner (Appeals) had rejected the appeal stating that the mandatory pre-deposit was not made in cash but through the CENVAT Credit balance. The department reiterated the findings of the Commissioner (Appeals).

4. Upon hearing both sides and examining the appeal records, the Tribunal considered the issue of whether the mandatory deposit could be made from the CENVAT Credit account as per the provisions of Section 35F of the Act.

5. The Tribunal observed that Section 35F does not explicitly require the deposit to be made only in cash. It was noted that the CENVAT Credit Rules, 2004 allow for the utilization of CENVAT Credit in certain situations. The Tribunal also highlighted the practice followed by the CESTAT Registry at Kolkata regarding payments made from the CENVAT Credit account.

6. The Tribunal concluded that the view taken by the First Appellate Authority, which held that the deposit under Section 35F cannot be made from the CENVAT Credit account, was not in accordance with the law. The Tribunal allowed the appeal by remanding the case back to the Commissioner (Appeals) for a decision on the merits without requiring any further pre-deposit. The parties were granted the opportunity to present evidence in support of their case.

7. In the operative part of the order, the Tribunal pronounced that the appeal was allowed by way of remand, thereby setting aside the previous decisions and allowing for a fresh consideration of the case on its merits.