2011 (9) TMI 140 - HC - Central Excise

CESTAT ordered to pre-deposit 60% of amount demanded - Payment of duty on non-excisable goods and availing cenvat credit - In view of decision in the matter of A-One Laminators Pvt. Ltd. (2011 -TMI - 204432 - DELHI HIGH COURT) tribunal directed to hear the matter without any condition of pre-deposit.

Summary

Issues:
1. Appeal against the Order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directing deposit of 60% of the amount demanded.
2. Applicability of Cenvat credit on duty paid on inputs in a manufacturing activity.
3. Interpretation of whether the process of lamination/metallization amounts to manufacture for excise duty purposes.

Issue 1: Appeal against CESTAT Order:
The High Court heard an appeal against the CESTAT's Order directing the Appellant to deposit 60% of the amount demanded. The Court noted that similar orders were passed by CESTAT on the same date in other cases. The Appellant challenged this directive citing a previous case where such a condition was disallowed, leading the Court to allow the appeal.

Issue 2: Cenvat Credit on Duty Paid on Inputs:
The Appellant, engaged in printing and lamination activities, claimed Cenvat credit on duty paid on inputs. However, the Adjudicating Authority reversed this credit, stating the activity did not amount to manufacturing. The Court, referencing a previous case, noted that if the process is not considered manufacturing, the Appellant should not have been required to pay excise duty. As the duty paid exceeded the Cenvat credit, the Court allowed the appeal to be heard without a pre-deposit condition.

Issue 3: Lamination/Metallization Process as Manufacture:
The Respondent argued that the process of lamination/metallization did not qualify as manufacturing based on a Supreme Court judgment. However, it was highlighted that the Adjudicating Authority did not address why excise duty was collected if the process was not considered manufacturing. Given that the duty paid exceeded the Cenvat credit, the Court opined that the appeal should proceed without any pre-deposit requirement.

In conclusion, the High Court allowed the appeal, setting aside the CESTAT's directive to deposit 60% of the demanded amount. The Court emphasized the need for a prima facie case before imposing such conditions and considered the discrepancy between duty paid and Cenvat credit in determining the Appellant's liability.