Custom, Excise & Service Tax Tribunal
Adobe Systems India Pvt Ltd vs Ce & Cgst Noida on 8 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70639 of 2021
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1365-19-20 dated
30/01/2020 passed by Commissioner (Appeals) Central Goods & Services
Tax, Noida)
M/s Adobe Systems India Pvt. Ltd., .....Appellant
(Plot No.A-5, Sector-132, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(Commissionerate, Noida) APPEARANCE:
Shri Kapil Vaish, Chartered Accountant for the Appellant Shri A.K. Choudhary, Authorised Representative for the Respondent CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70556/2025 DATE OF HEARING : 17 April, 2025 DATE OF PRONOUNCEMENT : 08 August, 2025 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.NOI- EXCUS-001-APP-1365-19-20 dated 30/01/2020 passed by Commissioner (Appeals) Central Goods & Services Tax, Noida. By the impugned order following has been held:-
"7. In Instant case, the department had issued the show cause notice to initiate the recovery of irregular Cenvat Credit availed by the appellant, which is mutually exclusive with the refund claim filed by the appellant. The instant demand is confirmed by the adjudicating authority under Rule 14 of the provisions of Cenvat Credit Rules, 2004 readwith Section 73 of the Finance Act'1994 vide Service Tax Appeal No.70639 of 2021 2 impugned order for recovery of irregular Cenvat Credit. I am of the view that the aforesaid debited amount towards their refund claim cannot be treated as the amount debited against the confirmed demand vide impugned order, as both cases are separate issue and could not be clubbed with each other. Accordingly, the appellant was required to pay the pre-deposit amount for filing of the instant appeal against such confirmed demand of irregular Cenvat Credit.
As discussed above, I find that the appellant failed to pre- deposit in the instant case and the statute does not permit the appeal to be entertained unless pre deposit has been made. Therefore, in absence of the mandatory pre-deposit the appeal No. 2003/ST/NOIDA/APPL/NOI/2018-19 dated 26.02.2019 is not fit to be entertained and is accordingly dismissed."
2.1 Appellant is engaged in providing taxable services under the category of Information Technology Software Services, Business Auxiliary Services and Management Consultant Service. They availed facility of Cenvat credit and are also engaged in export of the services in terms of Rule 6A of Cenvat Credit Rules, 1994.
2.2 Appellant filed refund claims in terms of Rule 5 of Cenvat Credit Rules during the period April, 2014 to September, 2015. Part of their refund claim as detailed in table below was rejected:-
Sl. No. Period Amount involved 'Rs
1. April,14 to June,14 10,12,392/-
2. July,14 to September,14 3,51,613/-
3. October,14 to December,14 4,43,531/-
4. January,15 to March,15 1,02,248/-
5. April,15 to June,15 1,90,989/-
6. July,15 to September,15 42,650/-
Total 21,43,423/-
2.3 Show cause notice dated 17.04.2017 was issued to the
appellant asking them to show cause as to why-
Service Tax Appeal No.70639 of 2021 3 "(i) CENVAT credit, in total amounting to Rs.21,43,423/- (Rupees Twenty One Lakh Forty Three Thousand Four Hundred Twenty Three only), should not be demanded and recovered from them under the provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994;
(ii) Interest, on the above amount, calculated at the appropriate rates, should not be demanded and recovered from them under the provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994; and
(iii) Penalty should not be imposed upon them under the provisions of Rule 15 of CENVAT Credit Rules, 2004 read with Section 76 of the Finance Act, 1994."
2.4 The said show cause notice was adjudicated as per the Order-in-Original dated 30.10.2018 holding as follows:-
"(i) I confirm the demand of Rs.21,43,423/- (Rupees Twenty One Lakh Forty Three Thousand Four Hundred Twenty Three only) to be recovered from them under the provisions of Rule 14 of CENVAT Credit Rules. 2004 read with Section 73 of the Finance Act, 1994:
(ii) I demand interest, on the above amount, to be calculated at the appropriate rates, and recovered from them under the provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994, and
(iii) I impose penalty @ 10% of the recoverable amount of Service Tax upon them under the provisions of Rule 15 of CENVAT Credit Rules 2004 read with Section 76 of Finance Act, 1994."
2.5 Against the said order, appellant filed appeal before Commissioner Appeals, wherein Commissioner (Appeals) has held that appellant has not complied with the conditions of Service Tax Appeal No.70639 of 2021 4 Section 35F of the Act and dismissed the appeal as per the impugned order referred in para-1 above.
2.6 Aggrieved appellant have filed this appeal. 3.1 I have heard Shri Kapil Vaish learned Chartered Accountant appearing for the appellant and Shri A.K. Choudhary learned Authorised Representative appearing for the revenue. 3.2 Arguing for the appellant learned Counsel submits that- It was submitted that the Order in Appeal had dismissed the appellants appeal on the ground of pre-deposit. Vide order dt. 07-12-2021 in defect diary No. 703112020, the Division Bench has held that since appellants have debited the entire disputed amount while submitting the application for refund, the appellants were therefore not required to make any further deposit.
In view of above, it was requested that the appeal be allowed by way of remand to the Commissioner (Appeals). During the course of hearing, the Bench desired to know as to whether appellants had filed any appeal against rejection of the refund claim and if yes, the appellants was directed to submit copy of the CESTAT order for the same. It also directed to submit copy of refund order of the original authority.
In this connection, it is submitted that appellants had filed 6 quarterly refund claims for Rs 128093465/- for the period April 2014 to September 2015. Out of it, the adjudicating authority allowed refunds for Rs. 125872980/- . Appellants had withdrawn claim for Rs. 125172/- and, the claim for balance amount of Rs. 2018251/- had been disallowed. Details of the claim filed and refund sanctioned are as under -
Period Amount of Date of Amount of Amount of refund
refund order refund disallowed/ Rejected
claimed withdrawn
Apr-Jun, 14 23000492 05-06-2015 125172 887220
Jul-Sep, 14 27791308 08-10-2015 0 351613
Oct-Dec,14 29801665 31-12-2015 0 520593
Jan-Mar,15 15000000 18-02-2016 0 102248
Apr-Jun, 15 12500000 17-05-2016 0 190989
Jul-Sep, 15 20000000 1-10-2016 0 42650
Service Tax Appeal No.70639 of 2021
5
Total 128093465 125172 2095313
Appellants did not filed any appeal against said rejection of refund claim. However on the basis of findings in refund orders, show cause notice dt. 17-04-2017 had been issued under Rule 14 of Cenvat Credit Rules, 2004 proposing to disallow the cenvat credit Rs. 21.43 lacs, out of the cenvat credit availed during April 2014 to September 2015. 3.3 Learned Authorized Representative reiterates the findings recorded in the orders of the lower authorities.
4.1 I have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For holding against the appellant, impugned order records as follows:-
"5. I have carefully gone through the facts of the case, appeal memo including the grounds of appeal, submission made by the appellant both oral as well as written and relevant provisions of the Act. Before going into the merits of the case, firstly I proceed to check, whether the appellant has fulfilled the provisions of Section 35F of the Central Excise Act as applicable in the Service Tax matter under Section 83 of the Finance Act 1994, read with which mandates that 7.5% of the amount under dispute has to be deposited before filing the appeal.
5.1 For clear understanding of the matter, Section 35F of the Act ibid is reproduced as under;
"[SECTION 35F. The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal -
(1) under sub-section (1) of section 35, 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 a decision or an order passed by an officer of Central Excise lower in rank than the (Principal Service Tax Appeal No.70639 of 2021 6 Commissioner of Central Excise or Commissioner of Central Excise]:
(il) 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:"
5.2 In the said statute it has been clearly stipulated that the Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal, under sub-sections (i & ii) of section 35E, 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 a decision or an order passed by an officer of customs lower in rank than the Principal Commissioner of Customs or Commissioner of Customs.
5.3 In the said section the words "shall not entertain any appeal" has been used, which means that no appeal can be entertained unless and until it is accompanied with details of the deposit particulars of 7.5% of the "duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute.
5.4 Thus by virtue of Section 35F the right to appeal as conferred under the said provision is a conditional right, the legislature in its wisdom has imposed a condition of deposit of a percentage of duty demanded or penalty levied or both before filing the appeal. The fiscal legislation as in question can very well stipulate as a requirement of Service Tax Appeal No.70639 of 2021 7 law of a mandatory pre-deposit as a condition precedent for an appeal to be entertained by the appellate authority." 4.3 In the present case, the appeal filed by the appellant before the First Appellate Authority has been dismissed for the want of pre-deposit after recording all the reasons and considering the submissions made by the appellant, on this issue the appeal filed by the appellant before this Tribunal was admitted by the Tribunal vide Order dated 07.12.2021 by observing as follows:-
"2. Ld. Consultant, Shri Kapil Vaish submits that the dispute in question is regarding the eligibility of Rs.21,43,423/- which according to the Revenue is the ineligible Cenvat Credit which they had taken. Accordingly, a demand has been confirmed by the Assistant Commissioner. He submits that this amount was part of their total refund claim under Rule 5 of the Cenvat Credit Rules of Rs.12,80,93,465/-. The disputed amount was debited while submitting an application for refund under Rule 5. The refund of the disputed amount of Rs.21,43,423/- was rejected by the Department. Simultaneously, the impugned Show Cause Notice was issued by which the credit of the disputed amount itself is sought to be denied which is the subject matter of the dispute of the present appeal. After the refund claim of the appellant was rejected the appellant has not taken back the credit of the disputed amount. Therefore, the entire amount of Cenvat Credit in dispute already stands reversed. He, therefore, submits that the requirements of mandatory pre-deposit stands complied and their appeal may be admitted.
3. Shri Amit Bhardwaj, ld. Departmental Representative confirms these facts.
4. In view of the above, we find that defect in the appeal stands removed. Registry is directed to number this appeal and list in due course."
Service Tax Appeal No.70639 of 2021 8 4.4 It is submission of the Counsel for the appellant that once the appeal has been admitted by the Tribunal, the pre-deposit conditions were fulfilled and the matter should be remanded back to the First Appellate Authority after setting aside the impugned order. I do not find any merits in the submissions made. The order of admission was not a decision in the appeal filed against the impugned order dismissing the appeal of appellant after consideration of the submissions made by the appellant.
4.5 Appellant have pleaded that the amount of Cenvat credit which has been denied by the Adjudicating Authority as per the Order-in-Original dated 30.10.2018 should be considered as pre- deposit as required under Section 35F of the Central Excise Act read with Section 83 of the Finance Act, 1994. The documents evidencing the payment of central excise duty/ service tax, against which the cenvat credit can be claimed are prescribed as per rule 9 of the CENVAT Credit Rules, 2004. These documents are like a negotiable instrument issued in the favour of claimant which can be en-cashed by claiming the credit. However if the said document is not found to be satisfactory by an authority so empowered then the same cannot be used for making payments till the same is declared a valid and satisfactory in the subsequent proceedings. The claim of credit once held inadmissible by the adjudicating authority renders the claim to credit void and the appellant cannot use the said credit for any purpose till the time the order of the adjudicating authority is set aside.
4.6 In the arguments advanced by the appellant, is identical to make the pre-deposit by using the dishonoured cheque, such a claim cannot be allowed. Commissioner (Appeals) has in his order analyzed the above position and has concluded that disallowed Cenvat credit cannot be considered for meeting the requirement of Section 35F of the Act.
4.7 It is settled position in law that a dishonoured cheque i.e. cheque that a bank refuses to clear or process for payment purpose is dishonoured. The same cheque could not have been Service Tax Appeal No.70639 of 2021 9 used for making the payment elsewhere. Accordingly, I do not find any merits in the submissions made in the appeal. 4.8 I am aware of the decisions where in it has been held that appeals should not be dismissed for want of pre-deposit. In case of Scan Computer Consultancy [2008 (12) S.T.R. 108 (Guj.)] Hon'ble Gujarat High Court held as follows:
"6. In case of Hussain Haji Harun (supra), this Court was called upon to deal with almost a similar controversy, the only point of difference being the fact that, in the said case, the Tribunal had dismissed the appeal for want of compliance with the order of pre-deposit. The order of pre- deposit in the said case was made on 15-4-1985 granting the petitioner therein two months time to deposit the sum as directed. The appeal came to be dismissed on 20-12- 1985. The petitioner preferred Miscellaneous Application No. 36 of 1986 seeking setting aside of the order of dismissal of the appeal and for restoring the appeal to file. As the facts reveal, the petitioner therein had not even made deposit before approaching the Court and only after filing the petition, by way of a Miscellaneous Civil Application, a direction was sought to the effect that the Tribunal should accept the sum of pre-deposit and restore the appeal. Such a leave was granted on 19-12-1987. Therefore, it is apparent that more than a period of two years had elapsed since the order directing pre-deposit and also dismissal of the appeal.
7. In the aforesaid backdrop of facts, this Court, while dealing with the contention that the rules did not permit Tribunal to restore the appeal in a case where appeal was dismissed for default in relation to non-deposit of the amount as directed, laid down, "The mere absence of such a provision regarding the situation when an appeal comes to be dismissed for non-deposit of the penalty amount or duty demanded cannot be construed on the basis that the Tribunal had no power to restore the appeal, which was Service Tax Appeal No.70639 of 2021 10 dismissed for non-deposit of the penalty amount or duty demanded."
8. After referring to the Apex Court decision in case of Collector, Land Acquisition, Anantnag v. Ms. Katijui, 1987 (28) E.L.T. 185 (S.C.), it was laid down, "when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred".
9. Repelling the contention that restoration of the appeal would amount to reviewing the earlier order of dismissal, it was laid down, "It is not possible to regard the order of dismissal on the ground that penalty amount was not deposited in time to be a final order. It is also, therefore, not possible to accept the view that restoring such an appeal would amount to reviewing the earlier order of dismissal. The whole fallacy lies in the approach that if such an appeal was to be restored, it would amount to reviewing its earlier final order."
10. Applying the aforesaid ratio to the facts of the case, it is apparent that Commissioner (Appeals) committed an error in law when he came to the conclusion that he could not restore the appeal and the only remedy was by way of preferring appeal before higher forum. Needless to state that, by mere default in making deposit as directed, the appellant does not stand to gain anything and only delays his right to have his case adjudicated. Nor does such a delay in making pre-deposit cause any prejudice to the revenue, in absence of any stay operating in favour of the petitioner. It cannot be lost sight of that right of appeal is statutorily granted and it is hedged in by the requirement to make pre-deposit as directed by the appellate authority, as being a condition for hearing of the appeal on merits. However, that condition cannot be used by the appellate authority for the purposes of denying an appellant the right of adjudication which is otherwise statutorily granted.
Service Tax Appeal No.70639 of 2021 11 In a given case, even if no pre-deposit is made, the appeal may not be heard, but having dismissed the appeal for non-compliance of pre-deposit does not permit the appellate authority to refuse to restore the appeal upon compliance being shown.
11. In these circumstances, the two communications dated 10-1-2006 (Annexure "E") and dated 20-1-2006 (Annexure "G") are hereby quashed and set aside. In the circumstances, the Commissioner (Appeals) is directed to hear and decide afresh the Miscellaneous Application for restoration of appeal in accordance with law after giving reasonable opportunity of hearing to the petitioner."
4.9 In case of Priya Dyers [2014 (305) E.L.T. 504 (Guj.)] Hon'ble Gujarat High Court held as follows:
"4. Be that as it may, insofar as this Court is concerned, consistent view has been that the right of appeal is sacrosanct and should not be lightly taken away. It is true that under the Central Excise Act, 1944. Such right of appeal is hatched by the requirement of pre-deposit of entire amount or such reduced amount as the appellate forum, the Commissioner of Tribunal, may in terms of Section 35F of the Central Excise Act, 1944, provide. However, in view of the fact that for want of fulfilling the requirement of pre-deposit, the assessee's right of statutory appeal would get destroyed and the decision adverse to him would get confirmed without consideration of issues on merits, the Court has also been taking relaxed view of belated compliance of requirement of pre-deposit. This is not to suggest that the order passed by the competent forum insisting on pre-deposit should either be allowed, ignored or to be taken lightly. This is only to suggest that such pre-deposit requirement is fulfilled somewhat belatedly and there is explanation of such delay. The Court would examine that in the interest of justice the appeal should be directed to be heard on merits or not."
Service Tax Appeal No.70639 of 2021 12 4.10 To allow the appellant a fair opportunity for being heard on the merits, I am of the view that appellant should be allowed opportunity to make the pre-deposit in cash before the first Appellate Authority. In case the appellant makes the pre-deposit as per Section 35F in cash and produces the challan before the Commissioner (Appeal) within a month of receipt of this order, the appeal of the appellant shall be heard and decided on the merits.
5.1 Appeal is allowed and matter is remanded back to Commissioner (Appeal) as per observations made in para 4.10.
(Order pronounced in open court on-08 August-2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp