Pre-deposit under Section 35F: Cenvat credit debiting satisfies pre-deposit where Rule 3(4) permits; appeal remanded.

Whether the mandatory pre-deposit under Section 35F can be satisfied by debiting the Cenvat Credit Account was decided on the basis that Section 35F does not prescribe cash payment exclusively and that Rule 3(4) of the Cenvat Credit Rules permits utilization of CENVAT credit for duty payment. The Tribunal applied prior authority and procedural practice treating Cenvat debits as valid pre-deposits; consequently the appellant's Cenvat debit was accepted as meeting the seven and a half percent requirement and the matter was remanded to the Commissioner (Appeals) for merits decision after giving opportunity of hearing.

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Issues: Whether the mandatory seven and a half percent pre-deposit under Section 35F of the Central Excise Act, 1944 can be made by debiting the Cenvat Credit Account and whether the appellant has fulfilled the pre-deposit requirement.

Analysis: Section 35F of the Central Excise Act, 1944 prescribes a pre-deposit of seven and a half percent before filing an appeal. Rule 3(4) of the Cenvat Credit Rules, 2004 governs permissible utilization of CENVAT credit. The Tribunal has held that the statute does not specifically mandate cash payment only and that where CENVAT credit is permissible for payment of duty, debiting the Cenvat Credit Account can satisfy the pre-deposit requirement. Reliance was placed on an earlier decision applying these principles and on the procedural practice of treating payments from the Cenvat Credit Account as due payments for purposes of Section 35F. In the present case the appellant had debited the Cenvat Credit Account for the pre-deposit and the matter therefore required adjudication on merits without insisting on additional pre-deposit, subject to observance of natural justice.

Conclusion: The pre-deposit requirement under Section 35F of the Central Excise Act, 1944 can be met by debiting the Cenvat Credit Account where CENVAT credit is permissible under Rule 3(4) of the Cenvat Credit Rules, 2004; the appellant's pre-deposit is accepted and the matter is remanded to the Commissioner (Appeals) to decide the appeal on merits after giving the appellant adequate opportunity of hearing.

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