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 nature of an amendment to CENVAT Credit Rules. The Court found the issue debatable and decided to hear the appeal on merits without requiring the pre-deposit, ultimately quashing the CESTAT's order and disposing of the appeal without costs.

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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.

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