2011 (11) TMI 5 - HC - Central Excise

Stay - pre-deposit - whether the CESTAT was justified in not following its earlier decision in the case of Nasik Strips Pvt. Ltd. (2010 -TMI - 204306 - CESTAT, MUMBAI) and directing the appellants herein to make pre-deposit of 50% of the central excise duty confirmed by the adjudicating authority and directing pre-deposit of 25% of the penalty imposed by the adjudicating authority. - Held that - In the present case, the S.L.P. filed against the Aurangabad Bench has been dismissed by the Apex Court by simply recording Dismissed . Therefore, in the facts of the present case, the dismissal of the S.L.P. against the decision of the Aurangabad Bench in the case of M/s. SRJ Peety Steels Pvt. Ltd. (supra) does not preclude the Co-ordinate Bench from questioning the correctness of the decision rendered by the Aurangabad Bench. Accordingly, the preliminary objection raised by the counsel for the appellants cannot be sustained. Earlier decision of High Court setting aside the pre-depoist order of CESTAT - Held that - when there were divergent views of the CESTAT, the proper course for the Aurangabad Bench was to dispose of the appeal on merits instead of setting aside the impugned decision dated 28th February, 2011 without assigning any reasons and directing the CESTAT to pass a fresh order after considering the decisions in the case of Nasik Strips Pvt. Ltd. (supra) and Mithunlal Gupta (supra), especially when the CESTAT in its decision dated 28th February, 2011 has declined to follow its decision in the case of Nasik Strips Pvt. Ltd. (supra) in view of the decision of the Apex Court in the case of Bhagwati Ispat Pvt. Ltd. (supra). - Division Bench to decide the appeals on merits and in accordance with law

Issues Involved:
1. Validity of the Aurangabad Bench's decision to remand the matter to CESTAT without expressing a view on the CESTAT's earlier order.
2. Whether CESTAT's order dated 28th February 2011, which directed pre-deposit, was justified.
3. Applicability of the Supreme Court's decision in Bhagwati Ispat Pvt. Ltd. to the case.
4. Consistency in CESTAT's decisions regarding pre-deposit requirements.

Detailed Analysis:

1. Validity of the Aurangabad Bench's Decision:
The Aurangabad Bench remanded the matter to CESTAT for reconsideration without expressing a view on the CESTAT's earlier order dated 28th February 2011. The larger Bench held that the Aurangabad Bench was not justified in setting aside the CESTAT's decision without providing reasons, especially when the CESTAT's order was based on the Supreme Court's decision in Bhagwati Ispat Pvt. Ltd. The Aurangabad Bench failed to record any finding on the applicability of the Supreme Court's decision, thus making its remand order unsustainable.

2. Justification of CESTAT's Order Dated 28th February 2011:
The CESTAT, in its order dated 28th February 2011, directed pre-deposit of 50% of the duty and 25% of the penalty. This decision was challenged on the grounds that it did not follow its earlier decision in Nasik Strips Pvt. Ltd., where full waiver of pre-deposit was granted. The CESTAT justified its order by stating that the decision in Nasik Strips Pvt. Ltd. was contrary to the Supreme Court's ruling in Bhagwati Ispat Pvt. Ltd. The larger Bench upheld that the CESTAT was correct in not following the Nasik Strips decision due to the Supreme Court's precedent.

3. Applicability of the Supreme Court's Decision in Bhagwati Ispat Pvt. Ltd.:
The CESTAT's decision to require pre-deposit was based on the Supreme Court's ruling in Bhagwati Ispat Pvt. Ltd. The Aurangabad Bench did not address why this Supreme Court decision was not applicable to the present case, which was a critical omission. The larger Bench emphasized that any lower court's decision must align with the Supreme Court's rulings unless explicitly distinguished.

4. Consistency in CESTAT's Decisions:
The Aurangabad Bench directed CESTAT to consider its earlier decisions in Nasik Strips Pvt. Ltd. and Mithunlal Gupta while deciding the pre-deposit issue. However, the larger Bench noted that the CESTAT had already found the Nasik Strips decision to be inconsistent with the Supreme Court's ruling. Furthermore, the Mithunlal Gupta decision did not consider the Supreme Court's ruling, making it an unreliable precedent. The larger Bench concluded that the Aurangabad Bench should have disposed of the appeal on merits instead of remanding it without clear directions.

Conclusion:
The larger Bench concluded that the Aurangabad Bench's decision to remand the matter without expressing a view on the CESTAT's order or the Supreme Court's ruling was not justified. It held that the Aurangabad Bench's decision could not be treated as a precedent, and the Division Bench could dispose of the appeals on their own merits. The reference was disposed of with no order as to costs, and the contentions of both sides were kept open for the Division Bench to decide in accordance with the law.

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