2006 (3) TMI 178 - HC - Central Excise

Summary

Issues:
Challenge to order of depositing amount for appeal against order of adjudication under Central Excise Act.

Analysis:
The petitioner, engaged in manufacturing, availed Cenvat credit based on a circular, later withdrawn, leading to a demand notice for recovery of wrongly availed credit. Adjudicating authority confirmed demand and imposed penalty. Commissioner directed petitioner to deposit the amount for appeal. Petitioner argued that if process not considered "manufacture," duty collected without authority, relying on binding circular till withdrawal. Revenue supported the order, citing the quantum of demand. Court noted mandatory pre-deposit under Section 35F but emphasized discretion for waiver, to be exercised judiciously. Court's concern was the Commissioner's exercise of discretion in directing deposit. Court found the order lacked proper application of mind, not justified under circumstances, and tilted prima facie in favor of the petitioner due to binding circular. Court allowed the writ petition, set aside the order, and directed appeal to be entertained without pre-deposit.

Conclusion:
The Court's detailed analysis focused on the exercise of discretion by the Commissioner in directing the deposit amount for the appeal against the order of adjudication under the Central Excise Act. Emphasizing the mandatory pre-deposit requirement under Section 35F, the Court highlighted the need for judicious exercise of discretion for waiver. Considering the petitioner's arguments regarding the binding circular and the revenue's stance on the demand amount, the Court found the impugned order lacking proper application of mind and not justified, leading to setting aside the order and allowing the appeal to proceed without pre-deposit.