2018 (3) TMI 1424 - HC - Central Excise

Pre-deposit - Held that - Considering that the debate with regard to validity of rule 8(3A) of the Central Excise Rules is not yet concluded and is sub-judice before the Apex Court and further considering the fact that the present appellants have deposited the defaulted amount in cash with interest after the impugned orders are passed, the impugned order is set aside - The CESTAT shall hear the appeals on their own merits filed by the present appellants without insisting for pre-deposit - appeal disposed off.

Summary

Issues:
Appeal against Tribunal's order directing pre-deposit of amount as a condition precedent for hearing the appeal.

Analysis:
The appellant contended that exercising the right of CENVAT Credit is permissible, and the defaulted amount was paid after the Tribunal's order. Reference was made to the Gujarat High Court's ruling that Rule 8(3A) of the Central Excise Rules is ultra vires, arguing that this decision should apply nationwide. The appellant requested the Tribunal to hear the appeals without requiring predeposit of the CENVAT Credit amount.

The respondent-department argued that an assessee who defaults in paying excise duty cannot avail CENVAT Credit for that period as per Rule 8(3A) of the Central Excise Rules. They relied on the judgment in Sunland Metal Recycling Industries case and the Karnataka High Court's decision in M/s. Manjunatha Industries case to support their stance. The respondent contended that the Tribunal's order was justified.

The High Court noted that the Gujarat High Court's judgment on the validity of Rule 8(3A) was challenged before the Apex Court, which had issued a notice but not stayed the decision. It was acknowledged that the appellant had deposited the defaulted amount in cash after the CESTAT's order, indicating good faith. The High Court observed that the debate on the rule's validity was ongoing and pending before the Apex Court. Considering these factors, the High Court set aside the impugned order, directing the CESTAT to hear the appeals without insisting on pre-deposit, and scheduled a future appearance date for the parties.

In conclusion, the High Court disposed of the appeals without costs, emphasizing that the CESTAT should proceed to hear the appeals on their merits without requiring pre-deposit, taking into account the ongoing legal debate on the rule's validity and the appellant's payment of the defaulted amount in cash.