2019 (5) TMI 667 - HC - Service Tax

Waiver of pre-deposit - CENVAT Credit - Rule 6(3A) of CCR - HELD THAT - Keeping in view the debatable issue involved in the appeal coupled with the fact that for the period from 1.2.2009 to 30.9.2010, the condition of pre-deposit of tax amounting to ₹ 1,46,01,332/- for hearing of the appeal has been stayed by the Tribunal, in our opinion, the appeal filed by the appellant deserves to be adjudicated without insisting for pre-deposit of ₹ 64,82,994/- in the present case. Tribunal had erred in law while not granting full waiver from pre-deposit instead directed the appellant to make a pre-deposit of ₹ 64,82,994/- with proportionate interest - the present appeal is allowed.

Summary

Issues:
Waiver of pre-deposit for hearing the appeal on merits.

Analysis:
The appeal was filed by the revenue under Section 35G of the Central Excise Act, 1944 against the order passed by the Tribunal directing a pre-deposit of a specific amount. The appellant, a manufacturer of home appliances, contested the demand of Cenvat Credit imposed by the Adjudicating Authority. The appellant argued that it had already complied with the amended law and reversed the input tax credit as required. The Tribunal had granted a stay of pre-deposit for a specific period but directed a pre-deposit for another period. The main contention revolved around whether the appellant should make a pre-deposit of a certain amount based on the amendment in the law regarding exempted services. The Tribunal's decision was challenged on the grounds of harshness and oppression due to the pre-deposit condition.

The High Court, after hearing both parties, focused on the issue of waiver of pre-deposit as a condition for hearing the appeal on merits. The Court refrained from delving into the merits of the case to avoid prejudicing the appeal before the Tribunal. Considering the debatable nature of the issue and the fact that pre-deposit for a previous period had been stayed by the Tribunal, the Court decided that the appellant's appeal should be adjudicated without insisting on the pre-deposit amount for the current period. The Court found that the Tribunal erred in not granting full waiver from pre-deposit and set aside the order directing the appellant to make the pre-deposit. Consequently, the Court allowed the appeal and instructed the Tribunal to decide the case on merit without requiring any pre-deposit, clarifying that this decision should not be construed as an opinion on the merits of the case.