2012 (3) TMI 91 - HC - Central Excise

Waiver of pre-deposit - whether Rule 10A of the Valuation Rules is applicable to the facts of the present case - assessee is inter alia engaged in the activity of body building at their factory on the motor vehicle chassis supplied by Tata Motors Limited - Perusal of the order of CESTAT dated 5th August 2008 clearly shows that the assessee voluntarily offered to make predeposit in that case, because, the issue being recurring in nature, the Tribunal would hear and disposed of the matter expeditiously - instead of deciding the earlier appeal filed by the assessee expeditiously, the Tribunal was not justified in directing the assessee to make predeposit in the present case by relying upon its earlier order - Decided in favor of the assessee

Summary

Issues involved:
1. Justification of CESTAT's directive for predeposit by appellant-assessee.
2. Applicability of Rule 10A of the Valuation Rules to the case.
3. Legality of CESTAT's order for predeposit based on previous voluntary agreement.

Issue 1: Justification of CESTAT's directive for predeposit by appellant-assessee:
The appellant-assessee contested the CESTAT's directive to make a predeposit of Rs.50,00,000 for entertaining the appeal against the Commissioner of Central Excise's order. The Tribunal's decision was based on the appellant's voluntary agreement in a prior case. However, the High Court found that the Tribunal was not justified in demanding the predeposit in the current case, especially when the earlier appeal, for which the predeposit was made, remained pending. The High Court set aside the CESTAT's order and directed the Tribunal to hear the appeal on its merits without insisting on predeposit.

Issue 2: Applicability of Rule 10A of the Valuation Rules to the case:
The crux of the matter revolved around the application of Rule 10A of the Valuation Rules to the appellant's situation. The Rule pertains to excisable goods produced by a jobworker on behalf of a principal manufacturer. The Excise Authorities sought to recover differential duty from the appellant using Rule 10A. However, the appellant argued that the Rule was not applicable to their case as they were not operating as an agent of Tata Motors but rather on a principle-to-principle basis. The High Court concurred with the appellant's stance, citing a previous Supreme Court judgment, and held that Rule 10A did not apply to the appellant's circumstances.

Issue 3: Legality of CESTAT's order for predeposit based on previous voluntary agreement:
The High Court scrutinized the legality of the CESTAT's order for predeposit, which was predicated on the appellant's earlier voluntary predeposit offer in a separate case. The Court noted that the previous offer was conditional and made for expedited disposal of the matter, which had not been resolved to date. Consequently, the High Court deemed the Tribunal's reliance on the prior voluntary agreement as unjustified in demanding predeposit in the present case. The Court emphasized that the Tribunal should hear the appeal on its merits without necessitating predeposit.

In conclusion, the High Court ruled in favor of the appellant-assessee, setting aside the CESTAT's order for predeposit and directing the Tribunal to proceed with the appeal on its merits without the predeposit requirement. The Court urged the expeditious resolution of similar pending appeals before the CESTAT, emphasizing the need for a swift adjudication process in such recurring matters.