2011 (6) TMI 651 - AT - Central Excise

Cenvat credit - wrong availment of Cenvat credit - appellants submitted that the appellant was operating under the provisions of Rule 12B of Central Excise Rules, 2002, which was admittedly omitted by Notification No.11/04-CE (NT) dated 09/07/2004 and the appellants are filing their returns regularly by availing the Cenvat credit and clearing their goods on payment of duty or under bond thereafter they have filed rebate claims, which have been sanctioned by the department Held that - appellate authority have not considered their submissions while passing the stay order, the same is not a speaking order, lower appellate authority have not considered the merits of the case, order is not passed on merits, pre-deposit waived, stay applications as well as the appeals are disposed of by way of remand

Summary

Issues:
Non-compliance with stay order leading to dismissal of appeals.

Analysis:
The appellants, manufacturers of excisable goods, availed Cenvat credit on inputs like yarn, grey fabrics, and finished fabrics. Operating under Rule 12B of Central Excise Rules, 2002, omitted by Notification No.11/04-CE (NT), they faced a show-cause notice for wrong credit availment. The notice resulted in confirmed demands, interest, and penalties, including a penalty on the director. The first appellate authority directed a 50% pre-deposit for taxes and penalties, which the appellants failed to comply with, leading to dismissal of their appeals.

The appellants argued that their regular return filing and rebate claims, sanctioned by the department, made the demands invoking extended periods unsustainable. They contended a strong case on merit and limitation. They criticized the first appellate authority's non-speaking order on pre-deposit compliance, urging a review on merit and limitation after waiving the pre-deposit requirement.

The Revenue representative acknowledged the lack of merit consideration in the impugned order, emphasizing the need for pre-deposit compliance following judicial guidelines. Referring to the Hon'ble High Court of Andhra Pradesh's principles on stay applications, the representative advocated for a pre-deposit before reconsideration on merits by the Commissioner (Appeals).

After assessing submissions and the judicial guidelines, the Tribunal found the first appellate authority's order routine and unmindful of consequences. Recognizing the appellants' strong prima facie case on limitation and balance of convenience, the Tribunal granted an unconditional waiver of pre-deposit. The Tribunal noted the Finance Minister's concerns over unnecessary litigations with taxpayers, contrasting with the impugned order.

Concluding that the impugned order lacked merit, the Tribunal remanded the appeals to the Commissioner (Appeals) for a detailed decision on merits and limitation without insisting on any pre-deposit, ultimately disposing of the stay applications and appeals through remand.