The Allahabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the mandatory deposit under section 35F of the Central Excise Act, 1944 can’t be made of debit in an electronic credit ledger under GST.
The appellant, M/s Johnson Mathey Chemical India Pvt. Ltd challenged the Order-in-Appeal dated January 25, 2022, passed by the Commissioner (Appeals), whereby he rejected the Appeal on the ground that the Appellant had not made the pre-deposit as per section 35F of the Central Excise Act, 1944.
The appellant stated that there was no defect as a requisite pre-deposit of a total of 10% had already been made where 7.5% of the disputed amount was deposited by way of reversal in GSTR-3B and an additional amount of 2.5% was deposited vide DRC-03 challan.
It was observed that as per the provisions of section 41 of the CGST Act, credit lying in the Electronic Credit Ledger can be utilised only for self-assessed output Tax. Further, the Tribunal observed that various cases relied on the appellant are about the debit of pre-deposit amount from CENVAT Credit Register and the same does not apply to the facts of the present case.
Mr Justice Dilip Gupta, President Mr P Anjani Kumar, member (technical) viewed that mandatory deposit under section 35F of Excise Act cannot be made by way of debit in the Electronic Credit Ledger maintained under CGST Act. The Tribunal held “that the defect is not cured. However, four weeks is granted to the appellant to make the mandatory pre-deposit, to remove the defect.” The appeal was allowed for statistical purposes.
Ms Priyanka Rathi appeared for the Appellant and Mr B.K. Jain appeared for the Respondent.
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