Tribunal allows using Cenvat credit for pre-deposit, rejecting Revenue's claim.

The Tribunal held that the appellant's compliance with the pre-deposit requirement by debiting the amount from their Cenvat credit account was sufficient, rejecting the Revenue's argument that availing SSI exemption affected the compliance. The Tribunal interpreted Notification No. 8/2003-C.E. to allow pre-deposits using Cenvat credit, supported by previous decisions. It distinguished pre-deposits from duty payments, granting a stay of recovery during the appeal process and linking the current appeal with the previous one for disposal.

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Issues:
1. Compliance with pre-deposit requirement for appeal.
2. Interpretation of Notification No. 8/2003-C.E. regarding utilization of Cenvat credit.
3. Applicability of pre-deposit as payment of duty.

Issue 1: Compliance with pre-deposit requirement for appeal
The Tribunal had directed the appellant to make a pre-deposit of Rs. 3 lakhs in a previous order. The appellant complied by debiting the amount from their Cenvat credit account. However, the Revenue contended that this did not fulfill the compliance since the appellant was availing SSI exemption during that period. The appellant challenged this stand, arguing that the restriction in the notification applies only to clearances and not to pre-deposits. The Counsel relied on Tribunal decisions and a High Court ruling to support their argument that pre-deposits can be made by debiting the Cenvat credit account.

Issue 2: Interpretation of Notification No. 8/2003-C.E. regarding utilization of Cenvat credit
The dispute arose from the interpretation of Notification No. 8/2003-C.E., which restricts manufacturers from utilizing duty credit on capital goods up to a certain limit. The appellant argued that this restriction applies only to clearances and not to pre-deposits. The Tribunal found that the decisions cited by the appellant, including a ruling by the Hon'ble High Court of Allahabad, supported the view that pre-deposits can be made using Cenvat credit.

Issue 3: Applicability of pre-deposit as payment of duty
The Revenue argued that pre-deposits cannot be considered as payment of duty, citing a High Court ruling that a deposit under Section 35F is not a duty payment but a pre-deposit for appeal rights. However, the Tribunal distinguished this case from the present situation, emphasizing that pre-deposits can be made using Cenvat credit as supported by Tribunal decisions and the High Court ruling. Consequently, the Tribunal waived the pre-deposit requirement and granted a stay of recovery during the appeal's pendency, linking the current appeal with the previous one for disposal.

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