2025 (6) TMI 1094 - AT - Service Tax

Maintainability of appeal - appellant s mandatory pre-deposit under Section 35F of the Central Excise Act 1944 was disputed - DRC-03 can be used for payment of pre-deposit for compliance of the provisions of the said Section 35F or not - HELD THAT - The learned Commissioner (Appeals) has not decided the appeal before him on merit and held that the appeal before him was not maintainable for non-compliance of the provisions of the said Section 35F even when 7.5% of the adjudged dues was paid through debit into electronic credit ledger on 04.06.2021. Hon ble Bombay High Court has affirmed the interim order dated 07.07.2023 passed by this Tribunal in the case of Saphire Cables and Services Pvt. Ltd. 2023 (7) TMI 544 - CESTAT MUMBAI . This Tribunal in the said interim order has held that 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. Conclusion - It is noted that in the present case the debit was made on 04.06.2021. Therefore the appellant had made mandatory pre-deposit as required under the said Section 35F. The impugned order set aside and the matter is remanded to learned Commissioner (Appeals) to decide the appeal before him on merit. The appeal is allowed by way of remand after setting aside the impugned order.

Summary

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.