QUESTION

Whether CENVAT CREDIT accounted for in RG-23 C Pt. II and ST-3 returns for the assessee in pre-GST era, can be used for the purpose of Pre-deposit under Section 35 F or 35 FF of the Central Excise Act,1944, also applicable to Finance Act,1994, while filing the appeal in under Section 35 B, now in GST era, as follows: (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Or is it necessary to deposit the Pre-deposit through Challan in Government account only. There are plethora of decisions that pre deposit can be made through CENVAT CREDIT in pre GST era. Yours sincerely, Kumud Bhatnagar.

ANSWER

Facts of the case: Is it necessary to deposit the Pre-deposit through Challan in Government account only or the pre deposit can be made through CENVAT CREDIT for the purpose of Pre-deposit under Section 35 F or 35 FF of the Central Excise Act,1944, while filing the appeal in under Section 35 B.

Law Applicable: Circular No.42/16/2018-GST

4.1 Recovery of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law and inadmissible transitional credit:
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(b) The arrears of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law arising out of any of the situations discussed in para 3 above, shall, unless recovered under the existing law, be recovered as central tax liability to be paid through the utilization of amounts available in the electronic credit ledger or electronic cash ledger of the registered person, and the same shall be recorded in Part II of the Electronic Liability Register (FORM GST PMT-01).

Reply: You have rightly mentioned that pre-deposit in pre GST Era could be made through debiting of CENVAT Credit A/c.

Please note that Electronic Credit Ledger in GST was initially generated by transfer of CENVAT Credit lying in the books of A/c through TRAN-1. Therefore the ITC A/c (Electronic Credit Ledger of GST) also represents CENVAT Credit of Service tax and Central Excise. Although there may be a technical aspect that it includes balance of Credit Ledger of Sales Tax also. To remove this difficulty Circular No.42/16/2018-GST dt. 13.04.2018 was issued for clarification regarding procedure for recovery of arrears under the existing law and reversal of inadmissible input tax credit.

As per above Circular, the recovery of Central Excise/Service Tax can be paid through Electronic Credit Ledger. Although it is mentioning recovery of tax yet payment against recovery of tax and pre-deposit represent the same thing. Therefore you can use Electronic Credit Ledger for payment of pre-deposit. (Reply dt. 13/07/2021)