Cenvat credit on pre-deposit under excise law upheld, with related demand and penalty set aside

Pre-deposit made under section 35F of the Central Excise Act, 1944 was treated as eligible for Cenvat credit on the basis of supplementary invoices, following the Tribunal's earlier view that such credit could not be denied. As the pre-deposit was held admissible as credit, the demand raised on the footing of inadmissible Cenvat credit could not be sustained, and the consequential penalty was also set aside.

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Issues: Whether pre-deposit made under section 35F of the Central Excise Act, 1944 could be treated as duty so as to permit availment of Cenvat credit on the basis of supplementary invoices, and whether the demand and consequential penalty could be sustained.

Analysis: The Tribunal noted that the assessee's own earlier case had already held that there was no justification to deny Cenvat credit of a pre-deposit made under section 35F of the Central Excise Act, 1944. It followed that view and held that the amount deposited as pre-deposit could be availed as Cenvat credit. Once the credit was held admissible, the demand raised on the premise of inadmissible credit could not survive. The setting aside of penalty followed from the same conclusion.

Conclusion: The Cenvat credit of the pre-deposit made under section 35F of the Central Excise Act, 1944 was held admissible, and the demand was set aside.

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