By TIOL News Service

MUMBAI, APRIL 08, 2019: MISCELLANEOUS applications have been filed by Revenue challenging the maintainability of appeal filed by the appellant M/s. IDBI Bank Ltd. against the order passed by the Commissioner of Central Excise & Service Tax, LTU, Mumbai.

It is contended that the appellant has not complied with the requirement of Section 35F of the CEA, 1944 inasmuch as they did not pre-deposit the amount of 7.5% of the disputed adjudged demand for filing the appeal before the Tribunal.

The issue which is in dispute pertains to admissibility of CENVAT Credit in respect of certain services. Commissioner has held that CENVAT Credit was not admissible.

Against the total demand of Rs. 61,49,57,000/- which was confirmed, an amount of Rs. 30,74,78,500/- (which was paid during the course of adjudication) was appropriated.

It appears that the amount which was appropriated is the 50% cenvat credit reversed by the appellant under the provisions of Rule 6(3B) of the Cenvat Credit Rules, 2004.

The rule 6(3B) of CCR, 2004 reads -

Appellants contend that such appropriation would satisfy the requirement of Section 35F ibid regarding payment of pre-deposit amount for the purpose of filing appeal before the Tribunal.

The AR reiterated that section 35F of the CEA, 1944 as applicable to the service tax matters under Section 83 of the Finance Act, 1994 mandates that the Tribunal shall not entertain any appeal, unless the appellant has deposited seven and half percent of the duty or penalty in dispute.

The Bench considered the submissions and observed thus -

+ Commissioner has, after consideration of the issue, held that CENVAT Credit was not admissible. Once it has been so held, the entire credit gets expunged from the book of accounts.

+ In our view, since the CENVAT Credit has been held to be inadmissible as such, it is not available to the appellants for any purpose, even for the payment of the amounts required to be deposited under Section 35F.

+ If any reversal from the inadmissible credit is considered a sufficient compliance to the provisions of Section 35F, then it is like, banker allowing encashment of fraudulent financial instrument like cheque or draft to that extent.

The Miscellaneous Applications filed by the revenue were allowed and the appellants were directed to comply with the requirements of Section 35F within a period of thirty days.

(See 2019-TIOL-995-CESTAT-MUM)