Appeal challenging pre-deposit order dismissed, time extended for deposit, appeal allowed for final disposal

The High Court dismissed the appeal challenging the order for pre-deposit under the Central Excise Act, extending the time for pre-deposit and allowing the appeal to proceed for final disposal based on evidence produced.

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Issues:
Challenge to order requiring pre-deposit under Section 35G of the Central Excise Act, 1944.

Analysis:
The appellant, engaged in manufacturing and trading, availed Cenvat Credit under the Cenvat Credit Rules 2004 for input services used in both activities. A show cause notice was issued seeking recovery of Rs.1.27 Crores of Cenvat credit availed on input services used in trading activities. The Commissioner confirmed the demand, and the Tribunal directed pre-deposit of Rs.1 Crore for the appeal. The appellant contended entitlement to credit for trading activities as a manufacturer and cited precedents where stay was granted for similar credits.

In the BHEL-GE Turbine Service case, the Tribunal granted stay for reversed Cenvat credit used in trading. The Ericsson India case followed this decision, granting stay for service tax on input services used in trading without credit reversal. However, these cases did not address whether input services for traded goods met the definition under Cenvat Credit Rules. The appellant also referenced the Coca Cola India case, focusing on merits, and the Colgate Palmolive case, which dealt with rule 6, not rule 2(1) of the Cenvat Credit Rules.

A similar issue arose in India Furniture Products Ltd. case, where the Tribunal directed deposit of input credit for traded goods during the stay application. The Tribunal in the present case considered that 90% of the appellant's turnover was from traded goods, reducing the pre-deposit amount to Rs.1 Crore. The High Court found no reason to interfere, noting the need for a detailed examination at the final hearing. The appeal was dismissed, extending the time for pre-deposit, with the appeal to be taken up for final disposal upon producing evidence before the Tribunal.

In conclusion, the High Court dismissed the appeal challenging the order for pre-deposit under the Central Excise Act, extending the time for pre-deposit and allowing the appeal to proceed for final disposal based on evidence produced.

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