Taxpayer Wins Cenvat Credit Appeal: Electronic Pre-Deposit Validates Compliance Under Section 35F Central Excise Act

CESTAT Mumbai allowed an appeal challenging cenvat credit disallowance. The Tribunal held that pre-deposit via electronic credit ledger (DRC-03) before 20.10.2022 constitutes valid compliance with Section 35F of Central Excise Act. Since appellant's debit occurred on 04.06.2021, the mandatory pre-deposit was deemed valid. The order was set aside and matter remanded to Commissioner (Appeals) for merit-based adjudication.

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The Appellate Tribunal (CESTAT Mumbai) addressed an appeal challenging the disallowance of cenvat credit and imposition of penalty, where the appellant's mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 was disputed. The Commissioner (Appeals) had held the appeal non-maintainable, reasoning that payment via debit from the electronic credit ledger (DRC-03) was invalid for pre-deposit compliance.The Tribunal referred to its precedent in *Saphire Cables & Services Pvt. Ltd.* (2023 (7) TMI 544), upheld by the Bombay High Court (2024 (8) TMI 1403), which held that pre-deposit made by debit through DRC-03 before 20.10.2022 constitutes valid compliance with Section 35F. Since the appellant's debit occurred on 04.06.2021, the Tribunal concluded the mandatory pre-deposit was duly made.Accordingly, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for adjudication on merit, stating: "if debit is made in electronic credit ledger, i.e. DRC-03, before 28.10.2022 towards payment of pre-deposit under the said Section 35F, then such debit is valid and it is to be concluded that the provisions of the said Section 35F have been complied with." The appeal was allowed by way of remand.

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