2014 (8) TMI 745 - AT - Central Excise

Denial of CENVAT Credit - Non compliance of pre deposit order - Held that - The appeals filed by the appellant before the first appellate authority, were dismissed for non-compliance. As the issue revolves around a narrow compass, therefore, after allowing the stay applications, the appeals themselves are taken up for disposal. From the facts & circumstances of these appeals, it is observed that the issue involved in these proceedings on taking of CENVAT Credit when borne by the appellant is arguable one but the premises hired is used by another job worker. In the dispute of this nature, asking of pre-deposit of nearly 50% of the amount confirmed seems to be excessive. Without expressing any opinion on the merits of the case, appellant is directed to pre-deposit an amount of ₹ 2 lakhs (Rupees Two lakhs only) in both these appeals within a period of four weeks and report compliance to the first appellate authority to decide the matter on merit. In view of the above observations, the OIA dt.24.03.2014 passed by the first appellate authority is set aside and the appeals are remanded back to first appellate authority for de-novo consideration - Decided in favour of assessee.

Issues:
1. Dismissal of appeals for non-compliance of pre-deposit order.
2. Excessive pre-deposit ordered by the first appellate authority.
3. Admissibility of CENVAT Credit when premises are used by a job worker.
4. Setting aside the OIA and remanding the appeals for de-novo consideration.

Issue 1:
The appellant filed stay applications and appeals regarding the dismissal of appeals by the first appellate authority for non-compliance of the pre-deposit order. The pre-deposit amount was set at Rs. 7,71,300, which the appellant contested as excessive. The appellant argued that they had a strong case on merit, citing relevant case laws to support their claim. The Revenue argued that even if the rent was paid by the appellant, Service Tax credit should have been claimed by the job worker. The Tribunal observed that the issue of CENVAT Credit when the premises are used by a job worker is arguable. The Tribunal directed the appellant to pre-deposit Rs. 2 lakhs in both appeals within four weeks and report compliance to the first appellate authority for a decision on merit. The OIA of the first appellate authority was set aside, and the appeals were remanded back for de-novo consideration.

Issue 2:
The main contention was the excessive pre-deposit ordered by the first appellate authority. The appellant argued that the pre-deposit amount was not justified and that they had a strong case on merit. The Tribunal, while not expressing an opinion on the merits of the case, found the 50% pre-deposit requirement to be excessive. Consequently, the Tribunal directed the appellant to pre-deposit a reduced amount of Rs. 2 lakhs in both appeals and instructed the first appellate authority to decide the matter on merits after compliance.

Issue 3:
The issue of the admissibility of CENVAT Credit when the premises are used by another job worker was a crucial aspect of the case. The appellant contended that since they had hired the premises, CENVAT Credit should be rightfully admissible under the CENVAT Credit Rules 2004. The Revenue argued that even if the rent was paid by the appellant, the Service Tax credit should have been claimed by the job worker. The Tribunal found this issue to be arguable and directed the appellant to pre-deposit a reduced amount for further consideration on merit.

Issue 4:
The Tribunal, after considering the arguments and case records, observed that the appeals were dismissed by the first appellate authority for non-compliance. Acknowledging the narrow compass of the issue, the Tribunal allowed the stay applications and took up the appeals for disposal. The Tribunal directed the appellant to pre-deposit a reduced amount and remanded the appeals back to the first appellate authority for de-novo consideration. The appeals were allowed by way of remand to the first appellate authority for a fresh decision on merits.

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