Excessive pre-deposit in arguable CENVAT credit dispute leads to remand for fresh merits consideration

A pre-deposit requirement was considered excessive where the dispute on CENVAT credit was arguable at the interim stage, involving premises hired by the appellant but used by a job worker. Requiring nearly 50% of the confirmed demand was treated as onerous, so the dismissal of the appeals for non-compliance was set aside. The matter was remanded to the first appellate authority for de novo consideration on merits, subject to compliance with a reduced pre-deposit condition.

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Issues: Whether the pre-deposit condition imposed by the first appellate authority was excessive and whether the matter should be remanded for fresh consideration on merits.

Analysis: The dispute concerned entitlement to CENVAT credit in relation to premises hired by the appellant but used by a job worker, making the controversy arguable at the interim stage. In such circumstances, requiring a pre-deposit of nearly 50% of the confirmed demand was viewed as onerous. The order dismissing the appeals for non-compliance was therefore set aside, and the appeals were sent back for fresh adjudication on merits after compliance with a reduced pre-deposit condition.

Conclusion: The pre-deposit direction was held to be excessive, and the matter was remanded to the first appellate authority for de novo consideration after the appellant deposits Rs. 2 lakhs.

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