2013 (9) TMI 934 - HC - Central Excise

High Court quashes pre-deposit order, allows appeal on merits, citing ambiguity in CENVAT Credit Rules

The High Court set aside the CESTAT's order directing a pre-deposit of Rs. 1.30 crores, citing pending appeals and ambiguity regarding the retrospective ... Order of Pre-deposit – Credit Availed on Inputs - Whether the CESTAT was justified in directing the appellant to make pre-deposit on the prima facie opinion that the credit availed on inputs used in construction of supporting structure which is embedded to the earth is not available to the assessee – Held that:- Prior to the amendment of Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004 - this Court in the case of Commissioner of Central Excise v. Ispat Industries Limited [2010 (4) TMI 169 - BOMBAY HIGH COURT ] - credit of duty paid on angels, channel and plates, etc. which are used in the construction of supporting structure would be available - the amendment to Explanation (2) to Rule 2(k) of the Cenvat Credit Rules, 2004 by notification dated 7th July, 2009 is retrospective in nature, the issue is debatable - In any event, dispute in the present case relates to the period prior to 7th July, 2009 - it is a fit case to hear the matter on merits without insisting on any pre-deposit - the order of CESTAT was quashed and set aside and the CESTAT was directed to hear the appeal on merits without insisting on any pre-deposit. Issues:Whether the CESTAT was justified in directing the appellant to make a pre-deposit of Rs. 1.30 crores based on the opinion that credit availed on inputs used in construction of supporting structure embedded to the earth is not available to the assessee.Analysis:The High Court analyzed the question raised in the appeal regarding the CESTAT's decision to order a pre-deposit of Rs. 1.30 crores. The CESTAT relied on a Larger Bench decision in the case of Vandana Global Limited. However, appeals against this decision and others are pending in various High Courts. The Court noted the amendment to Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004. In a previous case, the Court held that credit on inputs used in the construction of supporting structures would be available. The Larger Bench held that the amendment is retrospective, but the Court found the issue debatable. Since the dispute in this case pertains to a period before the amendment, the Court deemed it appropriate to hear the matter on merits without requiring a pre-deposit.The High Court quashed and set aside the impugned order of the CESTAT, directing them to hear the appeal on merits without insisting on any pre-deposit. The appeal was disposed of with no order as to costs.