In a recent ruling, the division bench of the CESTAT Kolkata held that the amount of pre-deposit under section 35F of the Central Excise Act can be made from both CENVAT Credit Account and Cash Account.
The bench was hearing appeals filed by the asessee, M/s Manaksia Ltd,challenging the order of the first appellate authority who disposed all their appeals by finding that 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, which is not admissible. The assessee contended that s. 35F(i) does not provide for such a condition that the deposit has to be made in cash only and not from CENVAT Credit Account.
Analyzing the provisions of s. 35F(i), the bench noted that it is not specifically mentioned that amount has to be deposited only by way of cash payment. “First Appellate Authority in para 3.1 of Order-in-Appeal dated 15/2/2016 has discussed Rule 3 (4) of the CENVAT Credit Rules, 2004 indicating the situation where CENVAT Credit can be utilised. In a case of dispute about admissibility of CENVAT Credit, ultimate action against an assesse, 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 assessee. 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. First appellate authority could have a view if debit of mandatory deposit was with respect to personal penalty or payment of interest.”
Read the full text of the order below.