2012 (6) TMI 193 - HC - Central Excise

High Court grants interim injunction for sick industrial unit challenging Cenvat Credit account recovery. Commissioner of Central Excise directed to expedite appeal.

The High Court granted an interim injunction in favor of the petitioner, a sick industrial unit, challenging the recovery of credit claimed in their ... Pre-deposit for filing statutory appeal - waiver of pre-deposit in exercise of appellate discretion - disposal of appeal on merits without further deposit - suo motu credit under the Cenvat scheme - authority's conclusion that claimed credit is beyond scope of CenvatPre-deposit for filing statutory appeal - waiver of pre-deposit in exercise of appellate discretion - disposal of appeal on merits without further deposit - Direction to the Commissioner (Appeals) whether to insist on further pre-deposit and whether the appeal should be disposed on merits without further deposit. - HELD THAT: - The Court noted that a substantial sum had already been debited by the department and that interim relief had been granted earlier in the writ proceedings. The petitioner relied on an earlier Division Bench decision and submitted that the question whether the claimed Cenvat credit was allowable ought to be considered on merits in the appeal. Having regard to the pendency of the matter, the prior debit made by the department, and the long delay, the Court declined to permit the Commissioner (Appeals) to insist on further pre-deposit and directed that the appeal be adjudicated on merits. The Court exercised supervisory jurisdiction to secure expeditious disposal and specified a reasonable time-frame for decision to avoid prolonged prejudice to the petitioner.The Commissioner (Appeals) was directed to dispose of the appeal on merits expeditiously, preferably within six weeks from receipt of the order, without insisting on further deposit.Suo motu credit under the Cenvat scheme - authority's conclusion that claimed credit is beyond scope of Cenvat - Acceptance of the appellate authority's prima facie view that the petitioner's suo motu Cenvat credit claim was not justified and beyond the scope of the Cenvat scheme was recorded but not finally adjudicated in the writ. - HELD THAT: - The appellate authority had recorded a prima facie conclusion that the petitioner's suo motu taking of Cenvat credit was not justified and beyond the scope of the Cenvat scheme; the Court did not disturb that prima facie finding in exercise of writ jurisdiction but required that the question be examined and decided on merits in the appeal. The writ remedy was used to secure adjudication by the appropriate appellate forum without compulsion of further pre-deposit, leaving substantive determination of the correctness of the credit to the Commissioner (Appeals).The prima facie conclusion by the Commissioner (Appeals) that the claimed suo motu credit was beyond the Cenvat scheme was noted but the matter was remitted for merits decision in the appeal.Final Conclusion: Writ petition allowed to the extent that the Commissioner (Appeals) is directed to decide the appeal on merits expeditiously, preferably within six weeks from receipt of copy of this order, without insisting on further pre-deposit; no costs. Issues:Petition for writ of certiorarified mandamus to quash order of Deputy Commissioner of Central Excise and direct appeal hearing without pre-deposit.Analysis:The petitioner filed a writ petition seeking a writ of certiorarified mandamus to challenge the order of the Deputy Commissioner of Central Excise Chennai II Division. The order in question involved the recovery of credit claimed by the petitioner in their Cenvat Credit account, along with the imposition of a fine. An appeal was filed with the first respondent, the Commissioner of Central Excise (Appeals), requesting a waiver of duty and penalty. The first respondent, after considering the case, concluded that the petitioner's claim for credit was not justified under the Cenvat scheme. Despite a partial payment made by the petitioner, the first respondent did not grant a waiver of the remaining amount. This decision led to the filing of the writ petition challenging the interim order passed by the Commissioner of Central Excise (Appeals).The High Court, upon admission of the case, granted interim injunction in favor of the petitioner, considering the company's status as a sick industrial unit and pending proceedings before the BIFR. A counter affidavit was filed by the respondents, disputing the petitioner's claims and highlighting the need for further recovery based on the expunged credit amount. The petitioner argued that their claim was based on a decision of the Division Bench of the Court and should be considered in the main appeal before the first respondent. Additionally, the petitioner emphasized the revival of the company and the substantial amount already debited, suggesting that the appeal should be decided on merits without additional deposit.In light of the arguments presented, the Court directed the Commissioner of Central Excise (Appeals) to expedite the disposal of the appeal within six weeks from the date of the order, without requiring any further deposit. The writ petition was allowed accordingly, with no costs imposed on either party.