Reliance Jio's Pre-Deposit via Credit Ledger u/s 35F Prior to 28.10.2022 is Valid: CESTAT
Before the Tribunal, the appellant relied on the CESTAT’s ruling in Saphire Cables, upheld by the Bombay High Court, which validated pre-deposits via DRC-03 made before 20.10.2022 for Section 35F compliance
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Mumbai, ruled that the mandatory pre-deposit by made through the electronic credit ledger ( DRC-03 ) prior to 28.10.2022 is a valid mode of payment under Section 35F ofthe Central Excise Act, 1944 (as applicable to service tax matters).
The case arose when Reliance Jio filed an appeal against an order dated 25.03.2021, which disallowed CENVAT credit of ₹6.28 lakh with an equal penalty. To comply with Section 35F, the company debited ₹47,102 via DRC-03 from its electronic credit ledger on 04.06.2021. However, the Commissioner (Appeals) rejected the appeal on the ground that the DRC-03 route is not valid for pre-deposit, thereby rendering the appeal non-maintainable.
Before the Tribunal, the appellant relied on the CESTAT Mumbai’s interim decision in Saphire Cables & Services Pvt. Ltd., where it was held that a pre-deposit made via DRC-03 before 20.10.2022 was valid for Section 35F compliance. This view was subsequently affirmed by the Bombay High Court on 28.08.2024 in 2024.
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The Tribunal, presided over by Anil G. Shakkarwar (Technical Member), held that since Reliance Jio’s DRC-03 debit was made on 04.06.2021 well before the cutoff date of 28.10.2022 it satisfies the requirements of Section 35F.
The bench observed that “I note that Hon’ble Bombay High Court has affirmed the interim order dated 07.07.2023 passed by this Tribunal in the case of Saphire Cables and Services Pvt. Ltd. (supra). I note that this Tribunal in the said interim order has held that if debit is made in electronic credit ledger, i.e. DRC-03, before 28.10.2022 towards payment of pre-deposit under the said Section 35F, then such debit is valid and it is to be concluded that the provisions of the said Section 35F have been complied with. I note that in the present case the debit was made on 04.06.2021. Therefore, I consider that the appellant had made mandatory pre- deposit as required under the said Section 35F.”
Accordingly, the Tribunal set aside the Commissioner (Appeals)' decision and remanded the matter for a decision on merits.
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