2012 (7) TMI 84 - AT - Central Excise

Dismissal of appeal for non-compliance of the pre-deposit ordered - issue regarding reversal of proportionate amount of CENVAT Credit attributable towards inputs which were consumed in the manufacture of exempted goods - Held that - Issue is covered by the retrospective amendment as well as various decisions, the first appellate authority should have considered the appeal itself and passed an order on merit instead of insisting on pre-deposit. Appeal allowed by way of remand.

Summary

Issues involved:
Waiver of pre-deposit of duty, retrospective amendment to CENVAT Credit Rules, reversal of proportionate amount of CENVAT Credit, consideration of appeal on merit without pre-deposit, principles of natural justice.

Analysis:

The Stay Petition was filed for the waiver of pre-deposit of duty amounting to Rs.38,73,719/- with interest and an equal amount of penalty, which had been confirmed by the adjudicating authority and upheld by the first appellate authority. The Tribunal found that the issue at hand, concerning the use of common input in the manufacture of dutiable and exempted goods, could be disposed of at that stage itself. The Tribunal noted that the demand arose due to the appellant's failure to reverse 8% of the value of goods, as directed, and that the issue was within a narrow compass and covered by a retrospective amendment to the CENVAT Credit Rules. Consequently, the Stay Petition was allowed, and the appeal was taken up for disposal.

The crux of the matter revolved around the reversal of the proportionate amount of CENVAT Credit attributable to inputs used in the manufacture of exempted goods. Both lower authorities held the appellant liable to pay 8% or 10% of the value of goods due to the absence of separate accounts. The Tribunal observed that the first appellate authority had dismissed the appeal solely based on non-compliance with the pre-deposit order, despite the issue being covered by the retrospective amendment and established decisions. The Tribunal opined that the first appellate authority should have considered the appeal on its merits rather than focusing on pre-deposit requirements. Consequently, the Tribunal directed the first appellate authority to hear the appeal on merits without any pre-deposit, set aside the impugned order, and remanded the matter for a fresh consideration following the principles of natural justice.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the necessity for the first appellate authority to reevaluate the issue on merit without insisting on pre-deposit, ensuring a fair and just consideration in accordance with the principles of natural justice.