Disposed

The Commissioner of Central Goods and Service Tax and Central Excise v. M/S Srd Nutrients Private Limited

Gauhati HC6 Sept 2019C.Ex.App./1/2019

Case brief

AI extract

What is this about?

The Gauhati High Court, in an appeal against a CESTAT order allowing the use of CENVAT credit for pre-deposit under Section 35F of the Central Excise Act, 1944, agreed with the High Court of Gujarat's view on the correctness of CESTAT's ruling. However, citing litigation policy limits on filing appeals below one crore, the bench disposed of the case without admitting it.

What did the court decide?

The appeal was disposed of; no orders were made on the legality of using CENVAT credit.

The Commissioner of Central Goods and Service… — Civil Procedure and Limitation | Gauhati HC (2019)

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Page No.# 1/3

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GAHC010138762018

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : C.Ex.App. 1/2019

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1:THE COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE MILAN NAGAR, LANE F PO CR BUILDING, DIBRUGARH, 786003

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VERSUS

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1:M/S SRD NUTRIENTS PRIVATE LIMITED INDISTRAIL AREA, MANGALDAI, DARRANG, ASSAM, 784125

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Advocate for the Petitioner : MR. B SARMAH

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Advocate for the Respondent : MR. H DAS

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BEFORE

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HONOURABLE THE CHIEF JUSTICE (ACTING) HONOURABLE MR. JUSTICE MANISH CHOUDHURY

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ORDER

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Date : 06-09-2019

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[A.K. Goswami, CJ (Acting).]

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Heard Mr. B. Sarmah, learned counsel for the appellant. Also heard Mr. S. Shukla, learned counsel, appearing for the respondents.

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This appeal under Section 35G of the Central Excise Act, 1944 (for short, “1944 Act”) is preferred against the order dated 03.01.2018 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, Eastern Zonal Bench, Kolkata in Appeal No.ST/77031/2017, whereby, while interfering with the order-in-appeal dated 07.09.2017 passed by the First Appellate Authority, rejecting the appeal filed by the respondent on the ground of non-deposit of mandatory pre-deposit as envisaged under Section 35F of the 1944 Act as the same was paid from CENVAT credit account maintained by the appellant, it was

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Page No.# 2/3

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also held that it is permissible to utilise the CENVAT credit as per Rule 3(4) of the CENVAT Credit Rules, 2004 (for short, “2004 Rules”). Accordingly, direction was issued to the First Appellate Authority to decide the appeal on merits without insisting for any further predeposit.

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Mr. Sarmah has submitted that view taken by CESTAT is erroneous and not sustainable in law and, therefore, a substantial question of law arises as to whether utilisation of CENVAT credit is permissible as per Rule 3(4) of the 2004 Rules for payment of pre-deposit in terms of Section 35F of the 1944 Act.

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Mr. Shukla has submitted that consistently CESTAT had taken the aforesaid view and had also issued a circular being Circular F. No.15/CESTAT/ General/2013-14 dated 28.08.2014 providing, amongst others, that appeals received on or after 06.08.2014 may be registered if mandatory deposit of duty confirmed is made from CENVAT account and evidence thereof is produced. He has submitted that the aforesaid Circular came to be issued in view of confusion of adjustment of CENVAT credit against mandatory penalty. It is further submitted that a Division Bench of the High Court of Jharkhand in Akshay Steel Works Private Limited -Vs- Union of India , reported in 2014 (304) ELT 518 (Jhar) had held that there is no provision in 2004 Rules, which prohibits an assessee from adjusting CENVAT credit against requirement of making a pre-deposit in an appeal preferred under Section 35F of the 1944 Act. Similar view was also taken by the Division Bench of the High Court of Gujarat in Cadila Health Care Private Limited -Vs- Union of India , reported in 2018 (18) GSTL 30 (Guj) .

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Furthermore, he has submitted that instruction dated 22.08.2019 was issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs (Judicial Cell) on the subject of reduction of Government litigation and raising of monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme Court in Legacy Central Excise and Service Tax. It is contended by him that monetary limit has been enhanced to 1 Crore so far as High Court is concerned and the dispute in the instant case revolves around 26,61,621/-.

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On a query of the Court, Mr. Sarmah submits that according to his information, no appeals had been preferred against the judgment of the High Court of Jharkhand in the case of Akshay Steel Works Private Limited (supra) and the judgment of the High Court of Gujarat in the case of Cadila Health Care Private Limited (supra). He, however,

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submits that a clarification is sought with regard to the Circular of CESTAT from the Central Board of Excise & Customs but no information had been received.

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Rule 3(1) of the 2004 Rules provides that a manufacturer or producer of final products or a provider of output service shall be allowed to take credit, which is called CENVAT Credit, in respect of the items indicated therein. Rule 3(4) provides that CENVAT credit may be utilised for payment in connection with the items indicated therein from (a) to (e). Rule 3(4) does not appear to be exhaustive and it does not impose any prohibition prohibiting an assessee from availing such credit for the purpose of pre-deposit.

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We are in agreement with the observation of the High Court of Gujarat that credit in an assessee’s CENVAT account is a duty he has already suffered.

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As the aforesaid judgements in Akshay Steel Works Private Limited (supra) and Cadila Health Care Private Limited (supra) had not been assailed before the Hon’ble Supreme Court and as the current litigation policy also restricts filing of appeal, value of which is less than ` 1 Crore, before the High Court, we find no good ground to admit the appeal and accordingly, the same is disposed of.

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Sd/- JUDGE

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Sd/-

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CHIEF JUSTICE (ACTING)

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Comparing Assistant

The Commissioner of Central Goods and Service Tax and Central Excise v. M/S Srd Nutrients Private Limited

Case brief

What is this about?

What did the court decide?

The Commissioner of Central Goods and Service Tax and Central Excise v. M/S Srd Nutrients Private Limited

Case brief

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What did the court decide?

What the court decided

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