Order Date: 23 August 2022

Facts-

• The Appellant, JOHNSON MATTHEY CHEMICAL INDIA PVT. LTD., has filed the appeal against the Order-in-Appeal passed by the Commissioner (Appeals), whereby he rejected the Appeal on the ground that the Appellant had not made the pre-deposit as per section 35F of the Central Excise Act, 1944.
• The appellant submitted that the finding of the Commissioner (Appeals) was erroneous as the appellant had made a pre-deposit of 7.5% of the disputed amount as per section 35F of the Excise Act, by way of reversal of CGST credit, duly reflected in GSTR-3B. The Appellant was not put on notice of any defect, with respect to the pre-deposit, by the Commissioner (Appeals).
• The appellant contended that section 35F of the Excise Act does not specify any method for payment of pre-deposit. As the old credit lying in balance has been transitioned to the GST regime and forms part of the GST credit pool, there should be no restriction on the utilization of that credit.
• The appellant stated that, as per the GST transition provisions of Section 142(7) of the CGST Act, the appeal should be disposed of in accordance with the provisions of the erstwhile laws. 
• The department contended though it was found from perusal of GSTR-3B for the month of August, 2021, that there was a reversal of CGST credit, the purpose of the reversal was not mentioned anywhere, which made the reversal doubtful. If the appeal is allowed, reversal of ITC may be impossible because there is no provision for refund of ITC under section 54(3) of the CGST Act, except for zero-rated supplies and ITC accumulated as a result of an inverted duty structure.

Issue-

• Whether the appellant assessee is entitled to make the pre-deposit of duty as per the requirement of section 35F of the Excise Act by debiting the Electronic Cash Ledger and Electronic Credit Ledger, under the CGST regime?

Order-

• The Tribunal observed that as per provisions of section 41 of CGST Act, credit lying in the electronic Credit Ledger can be utilised only for self-assessed output Tax. In this regard, in the case of Jyothi Construction it was held that "Output Tax", as defined under Section 2(82) of the OGST Act could not be equated to the pre-deposit required to be made in terms of Section 107 (6) of the OGST Act.
• Further, in case of M/s. DELL INTERNATIONAL SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX GST COMMISSIONERATE, the Tribunal accepted the contention of the appellant as learned authorized representative did not dispute that mandatory pre deposit can be made through the CGST Credit. Accordingly, the Tribunal held that mandatory pre-deposit can be made through the CGST Credit. However, the same was an interim consent order.
• The Tribunal held that Mandatory deposit under section 35F of Excise Act cannot be made by way of debit in the Electronic Credit Ledger maintained under CGST Act.
• To that extent, the defect is not cured. However, four weeks’ time is granted to the appellant to make the mandatory pre-deposit, so as to remove the defect.