2014 (11) TMI 536 - HC - Central Excise

Waiver of pre-deposit - Cenvat credit - Seizure of documents reveled that assessee wrongfully enjoyed CENVAT Credit - discrepancy in the raw material account - Non consideration of all the issues by CESTAT - Held that - Apart from the plea that the waste and scrap generated from the manufacturing process does not invalidate the availment of the Cenvat credit but a plea of limitation was also taken, which if succeeds, would render the entire proceeding to fall. This Court does not find any reflection in the impugned order that the CESTAT has addressed on the issue of limitation though the same was raised before the adjudicating authority and also raised before the CESTAT. Furthermore, the petitioner have produced documents and materials relating to the loss suffered in the business and raises the plea of financial hardship which does not appear to have been taken care of in the impugned order. issues raised before this Court which was also raised before the CESTAT has not been considered in the impugned order and, therefore, is required to be set aside. - matter remanded back to tribunal - Decided in favour of assessee.

Summary

Issues:
Challenge to order of Customs Excise & Service Tax Appellate Tribunal regarding waiver of pre-deposit or Cenvat credit and penalty.

Analysis:
The petitioner, a manufacturer of excisable goods, faced a demand for reversal of wrongly availed Cenvat credit due to alleged clearance of MS 'waste and scrap' at a low price, leading to the imposition of a substantial demand and penalties. The petitioner contended that the 'waste and scrap' generated during manufacturing were marketable commodities, not raw materials, and thus, the demand was unjustified. Additionally, a plea of limitation was raised as a defense. The Commissioner confirmed the demand and penalties, prompting the petitioner to challenge the order before CESTAT and seek a waiver of pre-deposit.

The petitioner argued that CESTAT failed to consider their financial position and the hardship depositing the demanded duty would cause. They emphasized the distinction between a prima facie case and an arguable case, advocating for a complete waiver due to undue hardship. Conversely, the respondent highlighted the inclusion of 'waste and scrap' in the raw material account, suggesting wrongful availing of Cenvat credit.

The judgment delved into the legal provisions governing pre-deposit requirements, emphasizing the need for the appellate tribunal to dispense with such deposits if undue hardship is demonstrated. Citing relevant case law, the court stressed the importance of exercising discretion objectively and considering undue hardship and revenue interests. The court noted that the issues of limitation and financial hardship raised by the petitioner were not adequately addressed in the impugned order, necessitating its setting aside.

The court directed CESTAT to reconsider the application, providing detailed reasons for its decision on both merits and limitation within a specified timeframe. Emphasizing the need for an independent decision, the court concluded the judgment, highlighting the importance of a fair and lawful process.