Case Note & Summary
The appellant, Ms. Arjandas Metal Industries Pvt. Ltd., filed an appeal under Section 35G of the Central Excise Act, 1944 against an order dated 10th February 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai. The CESTAT had directed the appellant to pre-deposit 50% of the duty demand confirmed against it, amounting to Rs.96,31,754/-, within eight weeks. The background of the case involves a show cause notice dated 8th May 2012 issued by the Additional Director General, DGCEI, Mumbai, alleging that the appellant had received Cenvatable invoices from Jammu-based manufacturers without actual delivery of goods. The Commissioner of Central Excise, Mumbai-II, passed an order-in-original dated 30th September 2013 confirming the recovery of wrongly availed CENVAT credit, along with interest and penalties. The appellant appealed to CESTAT and sought a stay or waiver of pre-deposit. The CESTAT partly allowed the stay application by directing a 50% pre-deposit. The appellant challenged this order before the High Court. The High Court noted that the appellant had made a strong prima facie case, as the show cause notice and order-in-original relied heavily on the statements of a broker, Shri Kevalchand G. Jain, which were subsequently retracted. The appellant had not been given an opportunity to cross-examine the broker. The Court held that the CESTAT had not properly considered the prima facie case and set aside the impugned order, remanding the matter to CESTAT for fresh consideration of the stay application without insisting on pre-deposit.
Headnote
A) Central Excise - Pre-deposit - Section 35F of Central Excise Act, 1944 - Waiver of Pre-deposit - The appellant challenged the order of CESTAT directing pre-deposit of 50% of duty demand. The High Court held that the appellant had made out a strong prima facie case for waiver of pre-deposit, as the show cause notice and order-in-original relied on statements of a broker which were retracted, and the appellant had not been given an opportunity to cross-examine the broker. The Court set aside the impugned order and remanded the matter to CESTAT for fresh consideration of the stay application without insisting on pre-deposit. (Paras 1-6)
Issue of Consideration
Whether the CESTAT was justified in directing the appellant to pre-deposit 50% of the duty demand without properly considering the prima facie case made out by the appellant.
Final Decision
The High Court allowed the appeal, set aside the impugned order dated 10th February 2014 passed by CESTAT, and remanded the matter to CESTAT for fresh consideration of the stay application without insisting on pre-deposit.
Law Points
- Pre-deposit under Section 35F of Central Excise Act
- 1944
- Prima facie case for waiver of pre-deposit
- CENVAT credit on invoices without delivery of goods
- Rule 14 of Cenvat Credit Rules
- 2004
