2023 (3) TMI 331 - HC - Central Excise

Seeking waiver of pre-deposit of 7.5% of duty for maintaining an appeal - petitioner claims that the interest of the revenue is fully protected as the petitioner is entitled to the refund of CENVAT credit which has not been processed yet - HELD THAT - This Court is unable to accept that the petitioner can set off its obligation to make a pre-deposit against its claim for the refund of CENVAT credit. However, we find merit in the contention that the petitioner s remedy of an appeal would be rendered illusory in the given circumstances where the petitioner does not have the liquid funds to make the said deposit. After some arguments, learned Counsel appearing for the petitioner states that the petitioner would make a deposit equal 2.5% of the liability instead of 7.5% to maintain the appeal against the order-in-original dated 26.11.2021 - thus, it is considered apposite to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit. Petition disposed off.

Issues:
1. Waiver of pre-deposit of 7.5% of duty for maintaining an appeal against the order in original.
2. Claim of entitlement to refund of CENVAT credit.
3. Error in raising demand due to erroneous premise regarding availing of abatement and CENVAT credits.
4. Reference to a favorable decision in the case of petitioner's sister concern.
5. Appeal rendered illusory due to inability to make pre-deposit.
6. Commencement of proceedings under Real Estate (Regulation & Development) Act, 2016 (RERA) and lack of adequate funds for pre-deposit.
7. Contention regarding setting off obligation to make pre-deposit against claim for refund of CENVAT credit.
8. Agreement to make a deposit equal to 2.5% of liability instead of 7.5%.
9. Direction to accept appeal if petitioner deposits 2.5% of liability.
10. Refraining from making observations on the merits of the case.

Analysis:
The petitioner sought waiver of the pre-deposit of 7.5% of duty to maintain an appeal against the order in original. The petitioner claimed entitlement to a refund of CENVAT credit, highlighting that the demand was raised on an erroneous premise related to availing abatement and CENVAT credits. The petitioner's counsel referenced a favorable decision in a related case, emphasizing a strong case on merits but inability to make the required pre-deposit, rendering the appeal illusory.

Moreover, the petitioner faced financial constraints due to proceedings under RERA and lacked liquid funds for the pre-deposit. The court acknowledged the inability to set off the obligation for pre-deposit against the CENVAT credit refund claim but recognized the appeal's potential illusory nature without sufficient funds. Eventually, after discussions, the petitioner agreed to deposit 2.5% of the liability instead of 7.5%, leading the court to direct that the appeal would not be rejected solely for the lack of the requisite pre-deposit.

The court refrained from commenting on the case's merits, disposing of the petition based on the agreed terms. All pending applications were also resolved as part of the judgment, providing a comprehensive resolution to the issues raised by the petitioner regarding the pre-deposit requirement and the appeal process against the original order.

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