TaxTMI 
TaxTMI 
Can Pre - deposit be paid by way of reversal of Cenvat Credit?
Payment of Pre Deposit
17 Feb 2017 
8 Replies 
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Use of Cenvat credit for pre-deposit is not permitted; pre-deposit generally must be paid in cash.
CENVAT credit is permitted for specified payments such as excise on final products, inputs removed, capital goods removed, certain rule liabilities and output service tax, but the rule framework does not authorise use of CENVAT credit for making the mandatory pre-deposit for appeals. A tribunal circular suggesting CENVAT account payment may suffice is contradicted by some higher court decisions, and the prevailing administrative practice requires pre-deposit in cash, with refund handled administratively. (AI Summary)
CENVAT credit is permitted for specified payments such as excise on final products, inputs removed, capital goods removed, certain rule liabilities and output service tax, but the rule framework does not authorise use of CENVAT credit for making the mandatory pre-deposit for appeals. A tribunal circular suggesting CENVAT account payment may suffice is contradicted by some higher court decisions, and the prevailing administrative practice requires pre-deposit in cash, with refund handled administratively. (AI Summary)