2022 (9) TMI 44 - AT - GST

Appeal dismissed for improper pre-deposit attempt using GST credit ledger instead of mandatory section 35F excise pre-deposit

M/s. Johnson Matthey Chemical India Pvt. Ltd. Versus Assistant Commissioner CGST, And Central Excise, Kanpur

CESTAT Allahabad rejected appellant's appeal for non-compliance with mandatory pre-deposit under section 35F of Central Excise Act, 1944. Appellant ... Maintainability of appeal - appeal rejected on the ground that the Appellant had not made the pre deposit as per section 35F of the Central Excise Act, 1944 - requirement to make pre-deposit by debiting the Electronic Cash Ledger and Electronic Credit Ledger - section 41 of the GST Act - HELD THAT:- In M/S. DELL INTERNATIONAL SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX GST COMMISSIONERATE [2019 (1) TMI 1033 - CESTAT BANGALORE], the Tribunal accepted the contention of the appellant as learned authorized representative did not dispute that mandatory pre deposit can be made through the CGST Credit. Accordingly, the Tribunal held that mandatory pre deposit can be made through the CGST Credit. Thus, it has to be held that mandatory deposit under section 35F of Excise Act cannot be made by way of debit in the Electronic Credit Ledger maintained under CGST Act - the defect is not cured. However, four weeks time is granted to the appellant to make the mandatory pre-deposit, so as to remove the defect. Issues Involved:1. Compliance with the mandatory pre-deposit requirement under Section 35F of the Central Excise Act, 1944.2. Validity of utilizing CGST credit for the mandatory pre-deposit.3. Procedural aspects and opportunity to cure defects in the appeal.Detailed Analysis:1. Compliance with the mandatory pre-deposit requirement under Section 35F of the Central Excise Act, 1944:The appellant filed an appeal against the Order-in-Appeal dated January 25, 2022, which was rejected due to non-compliance with the mandatory pre-deposit requirement. The appellant argued that they had made the pre-deposit by reversing CGST credit, which was reflected in GSTR-3B and further supplemented by DRC-03 challan. The appellant contended that the pre-deposit was in compliance with Section 35F of the Excise Act.2. Validity of utilizing CGST credit for the mandatory pre-deposit:The appellant argued that the pre-deposit through credit reversal is permissible, citing various tribunal and court decisions, including Dell International Services India Pvt. Ltd. vs. Commissioner of Central Tax, which accepted such a pre-deposit. The appellant also referenced CBIC circulars that allowed the utilization of electronic credit ledger for payment of central tax liabilities.The respondent countered that Section 35F of the Excise Act does not provide for pre-deposit through CGST credit reversal. The respondent cited the Orissa High Court's decision in M/s Jyoti Construction vs. Deputy Commissioner of CT & GST, which held that the electronic credit ledger could not be used for pre-deposit under the CGST Act.The tribunal noted that Section 41 of the CGST Act restricts the use of the electronic credit ledger to self-assessed output tax. It held that the Orissa High Court's decision in Jyoti Construction, which prohibits using the electronic credit ledger for pre-deposits, is binding. The tribunal found no High Court judgment supporting the appellant's contention and distinguished the case of Amit Gupta, which involved bail conditions rather than pre-deposit.3. Procedural aspects and opportunity to cure defects in the appeal:The appellant argued that they were not given an opportunity to cure the defect regarding the pre-deposit. The tribunal acknowledged the procedural requirement for allowing appellants to cure defects, referencing Century Laminating Co. v. CCE. Consequently, the tribunal granted the appellant four weeks to make the mandatory pre-deposit to cure the defect.Conclusion:The tribunal concluded that the mandatory pre-deposit under Section 35F of the Excise Act cannot be made by debiting the electronic credit ledger under the CGST Act. The defect was not cured, but the appellant was given four weeks to make the necessary pre-deposit to remove the defect. The order was pronounced in the open court on August 23, 2022.