Appeals Before CESTAT - Can pre-deposit be made from CENVAT Credit?
YESTERDAY, DDT carried the CESTAT instruction on pre-deposit from CENVAT credit. The lingering doubt is whether the pre-deposit of penalty can be made from the CENVAT account. An appellate commissioner informed us that he has clarified to his staff and to the trade that pre-deposit of seven & a half percent can be made from CENVAT account too, as there is no bar on the same in the law.
Maybe we have to wait for the clarification from the mysterious 'Competent Authority'.
In , the original authority had confirmed demand of duty of Rs. 57,500/- against the assessee and imposed on them equal amount of penalty. Aggrieved by the order, the assessee preferred an appeal to the Commissioner (Appeals) and also filed therein an application for waiver of pre-deposit under Section 35F of the Central Excise Act. In the said application, the appellate authority directed the appellant to pre-deposit an amount of Rs. 1.00 lakh. The appellant debited the amount in their MODVAT account and claimed that they had complied with the direction for pre-deposit under Section 35F. The appellate authority did not accept this to be 'due compliance' with Section 35F. He took the view that the above amount of Rs. 1.00 lakh should have been deposited through TR-6 challan. On this basis, the assessee's appeal came to be dismissed for non-compliance with Section 35F.
And the matter reached the CESTAT.
The Tribunal observed, "we are of the view that pre-deposit of the duty amount by way of debit in MODVAT account can be accepted as sufficient compliance with Section 35F and, therefore, the assessee need not be called upon to make any payment towards penalty through TR-6 challan. However, we are in agreement with the appellate Commissioner's view that any amount of penalty cannot be deposited through debit in MODVAT account. In the present case, debit of Rs. 57,500/- (duty) in the MODVAT account is an admitted fact and the same would suffice the purpose of Section 35F. In the circumstances, the learned Commissioner (Appeals) has to consider the assessee's appeal on merits in accordance with law. Therefore, after setting aside the impugned order, we request the Commissioner (Appeals) to dispose of the assessee's appeal against the order-in-original, on merits without insisting on any further pre-deposit."
Will the Board give a clarification or allow litigation to generate and proliferate?