2015 (3) TMI 82 - HC - Central Excise

Restoration of appeal - Non compliance of pre deposit condition - assessee had, instead of depositing the amount in cash or through account PLA (under the Rules), sought to claim adjustment of amounts lying to its credit in its CENVAT credit account. - Held that - It is a matter of record that the duty liability was discharged in the present instance along with interest, though beyond the stipulated period of 30 days. In these circumstances, the limited issue was whether the denial of credit facility altogether was warranted. The CESTAT had no occasion given the diversion of opinion of two of its members and the final opinion of the third member, which varied with both the members to the extent that he directed deposit of ₹ 6 lakhs, to consider the order on merits. In one sense, the order of the third member by default becomes the order of the Tribunal on the question of pre-deposit. Further, the appellant s contentions were never considered on the merits after it complied with one member s order of depositing ₹ 5000/-. assessee s appeal would be considered on its merits provided it has complied and deposited ₹ 5,000/-. - Matter remanded back - Decided conditionally in favour of assessee.

Summary

Issues involved:
Interpretation of Rule 8(3A) of Central Excise Rules, 2002 regarding duty payment delay and default consequences; Compliance with CESTAT directions for depositing a specific amount as a pre-condition for appeal; Consideration of diverse views of High Courts on denial of credit facility for technical defaults.

Analysis:
The judgment addresses the issue of compliance with the directions of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) for depositing a specific amount as a pre-condition for appeal. The appellant was issued a Show Cause Notice for violating Rule 8(3A) of the Central Excise Rules, 2002, which mandates duty payment within 30 days to avoid being treated as a defaulter. The appellant sought to adjust the duty payment with amounts in its CENVAT credit account, leading to a dispute. The CESTAT directed the appellant to deposit a specific sum, which the appellant failed to comply with, resulting in the dismissal of the appeal.

The main legal question before the court was whether the denial of the credit facility due to technical default was justified. The appellant argued that the default was technical and should not lead to the denial of the credit facility, citing a Gujarat High Court ruling. On the other hand, the Revenue contended that the appellant was obligated to comply with the CESTAT's directive for pre-deposit based on the majority view and previous court decisions.

Upon careful consideration, the court found that the duty liability was eventually discharged, albeit beyond the stipulated period. The court noted the varied opinions of the CESTAT members and emphasized that the appellant's contentions were not fully considered on merits. Consequently, the court decided that justice would be best served by restoring the appeal to the CESTAT for a comprehensive review, taking into account the differing views of the Madras and Gujarat High Courts on similar issues.

In conclusion, the court ruled in favor of the appellant, directing the CESTAT to reconsider the appeal on its merits while ensuring compliance with the deposit requirement. The judgment highlights the importance of due process and thorough consideration of all aspects before making a final decision in matters of tax compliance and appellate procedures.