At, High Court of Gujarat At Ahmedabad
By, THE HONOURABLE MR. JUSTICE AKIL KURESHI & THE HONOURABLE MR. JUSTICE B.N. KARIA
For the Appellant: Dhaval Shah, Advocate. For the Respondent: Nirzar S Desai, Advocate.
Akil Kureshi, J.
1. The petitioners have challenged communications dated 21.08.2014 and 28.11.2014 commonly produced at Annexure A issued by the Commissioner (Appeals), Central Excise & Customs, Surat-II, under which, he called upon the petitioners to pay the amount of pre-deposit for maintaining the appeals in cash instead of through availing cenvat credit in the account.
2. The petitioners had certain disputes regarding availing cenvat credit on the sales promotion charges under the category of business auxiliary service with the department.
The department therefore issued show-cause notices to recover the cenvat credit so availed which according to department, was erroneous. Various notices along the same line were issued by the department. The petitioners opposed the proposal contained in the show-cause notice. The Adjudicating authority passed an order dated 25.06.2014 disallowing the cenvat credit to be recovered with interest. He also imposed the penalty. Against such order, the petitioners preferred appeal before the Appellate Commissioner on 08.08.2014. In terms of section 35F of the Central Excise Act, the petitioners needed to deposit certain percentage of the duty and penalty by way of pre-deposit to maintain the appeal. The petitioners deposited the specified sum, however, by debiting the cenvat credit account to that extent. According to the petitioners, this mode of deposit was even otherwise accepted by the department. The petitioners also relied on a circular issued by CESTAT dated 28.08.2014 clarifying that the appeals may be entertained, if mandatory, pre-deposit is made from cenvat account and evidence is produced.
3. Respondent No. 3-the Commissioner appeals however, did not accept the petitioners' stand in this regard and, by the impugned communication, insisted that the mode of making pre-deposit was not proper; and that he petitioner must deposit the amount in question in cash. The petitioners made further detailed correspondence with the said authority and also represented before the department pointing out inter alia that the departmental authorities have been accepting such mode of payment, that the petitioners have thus fulfilled the requirement through legitimate means and that therefore, the appeals be entertained on merits. However, respondent No.3 was unmoved. Thereupon, the petitioners have approached this Court.
4. On behalf of the petitioners, learned counsel Mr. Shah submitted that there is nothing in the statute to prevent an assessee from making the pre-deposit by availing the credit in his cenvat account. He relied on the judgement of Division Bench of Jharkhand High Court in case of Akshay Steel Works Pvt. Ltd vs. Union of India reported in (2014) 304 ELT 518 and of the learned Single Judge of Allahabad High Court in case of India Casting Company vs. CEGAT, New Delhi reported in (1998) 104 ELT 17. He pointed out that Ahmedabad Bench of the Tribunal in case of Hindprakash International Pvt. Ltd vs. Commissioner of S.T., Ahmedabad reported in (2016) 41 STR 70 also has taken similar view.
5. On the other hand learned counsel Mr. Nirzar Desai appeared for the department and mainly contended that the order of the appellant-commissioner is appelable. The petitioners have filed this petition without availing the statutory remedy. In any case, the petition is much belated.
6. At the outset, we may dispose of the primary objections to the maintainability of the writ petition raised by the respondents. The decision of the Commissioner (Appeal) which is challenged by the petitioners can perhaps be categorized as mere communications. We wonder whether such communications can be termed as orders which are appelable. There is no dispute about the petitioners' liability to predeposit 7.5% of the disputed dues. The only dispute is whether such pre-deposit can be made only by cash or also by availing credit in cenvat account. It appears that Commissioner had not even put the petitioners to notice about the decision that he took in this regard. This was thus not a case of by parte hearing culminating into a quasi judicial decision formed by the Commissioner which was a mere communication of his opinion that such pre-deposit must be made in cash. Even otherwise, it is well settled that mere availing of alternative remedy is not a bar to entertain a writ petition. Even the ground of delay is not valid. The petitioners after receiving the communications in question made detailed correspondence with the departmental authorities trying to persuade them that the pre-deposit as well can be made with the aid of cenvat credit. Having failed in receiving the positive response, this petition came to be filed.
7. Coming to the central issue, the Commissioner does not appear to be correct in his stand. Essentially, credit in an assessee's cenvat account is a duty he has already suffered which he can encash for specified purposes subject to conditions laid down under the Rules. As observed by Division Bench of Jharkhand High Court in case of Akshay Steel Works Pvt. Ltd (supra) there is nothing i
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n the Rules preventing an assessee from availing such cenvat credit for the purpose of pre-deposit. Similar view was taken by the learned Single Judge of Allahabad High Court in case of India Casting Company (supra). Petitioners had also pointed out that even departmental authorities have been accepting such formula. 8. In the result, impugned communications are quashed. Predeposit made by the petitioners by availing cenvat credit shall be accepted for the purpose of section 35F of the Central Excise Act. The appeals shall be heard by the Commissioner on merits.