2014 (5) TMI 871 - HC - Central Excise

Waiver of pre deposit - CENVAT Credit - services availed at the retail stores, outward freight, membership fees and sales commission - Whether in facts & circumstances of present case impugned stay order dated April 21, 2014 passed by the CESTAT directing the Appellants to deposit ₹ 40 lakhs with interest as a condition precedent for hearing the Appeal is correct in law inasmuch as Appellants have demonstrated strong prima-facie case & thus made out a case for complete waiver of pre-deposit of duty, interest & penalty - Held that - It will not be appropriate to examine the dispute on merits since any observation made by the Court would prejudice the case of either of the parties in the pending appeal. Suffice it to state that the Appellate Tribunal, on a prima facie analysis, has granted waiver of pre-deposit on deposit of ₹ 40 lacs together with proportionate interest which amount has been directed to be deposited within six weeks from the date of the order. The issue of financial hardship has not been raised before us and nor does it appear to have been raised before the Appellate Tribunal - No substantial question of law arises - Decided against assessee.

Issues:
1. Challenge to the order of Customs Excise and Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1994.
2. Substantial questions of law raised by the appellant regarding the stay order directing deposit of Rs.40 lakhs with interest.
3. Appeal against the Commissioner's order demanding recovery of inadmissible credit under Cenvat Credit Rules 2004 and Central Excise Act 1944.
4. Application for stay and waiver of pre-deposit under Section 35F disposed of by the impugned order.
5. Disagreement regarding the reliance on the decision in Ultra Tech Cement case by the Appellate Tribunal.
6. Consideration of conflicting judgments by the Tribunal in LG Electronics case and Ultra Tech Cement case.

Analysis:
1. The appellant challenged the order of the Customs Excise and Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1994. The appellant raised substantial questions of law regarding the correctness of the stay order directing the deposit of Rs.40 lakhs with interest as a condition precedent for hearing the appeal. The appellant contended that a strong prima facie case had been demonstrated, warranting a complete waiver of pre-deposit of duty, interest, and penalty.

2. The appeal was against the Commissioner's order dated 31 March 2013, demanding recovery of inadmissible credit of Rs.51,44,507/- under the Cenvat Credit Rules 2004 and Central Excise Act 1944. The order included the recovery of service tax credit, applicable interest, and a penalty. The appellant also filed an application for stay and waiver of pre-deposit under Section 35F, which was disposed of by the impugned order.

3. The impugned order granted a waiver of pre-deposit on the condition that the appellant remit Rs.40 lakhs plus interest within six weeks. The Tribunal's decision was based on a prima facie analysis indicating that certain credits fell outside the amended definition of input service. The appellant disagreed with the reliance on the Ultra Tech Cement case by the Tribunal, arguing that the LG Electronics case should have been considered instead.

4. The Court refrained from examining the dispute on merits, noting that any observation could prejudice the pending appeal. The Court highlighted that the issue of financial hardship was not raised during the proceedings. Ultimately, the Court dismissed the appeal, stating that it did not give rise to any substantial question of law.

5. The judgment emphasized the importance of procedural fairness and adherence to legal principles in matters of taxation and excise. The decision highlighted the significance of complying with statutory requirements and the need for parties to present their cases diligently and in accordance with established legal standards.

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