2014 (9) TMI 539 - HC - Service Tax

Court permits bond instead of cash deposit for Cenvat credit appeal.

KOHINOOR BISCUITS PRODUCTS Versus COMMISSIONER OF CENTRAL EXCISE

The Court allowed the appeal challenging the Customs, Excise & Service Tax Appellate Tribunal's order, particularly regarding the directive to deposit ... Waiver of pre-deposit - Whether CESTAT is justified in directing to deposit the 50% of Cenvat credit even after making an observation that “on the basis of the decisions referred to supra we find a prima facie case in favour of appellant’? - Held that:- The learned counsel for the appellant submit that the controversy on merits stands concluded in favour of the appellant. However, it is not necessary for the court to go into this question as the matter is still subjudice before the Tribunal. Taking into consideration that the Tribunal has recorded finding of prima facie case in favour of the appellant, we are of the opinion that the interest of the Revenue is protected, if the appellant is permitted to furnish bond to the extent of 50% of the basic Cenvat credit instead of asking the appellant to deposit said amount in cash. - order of tribunal modified. Issues:1. Challenge to order of Customs, Excise & Service Tax Appellate Tribunal under Section 35G of Central Excise Act.2. Direction to deposit 50% of Cenvat credit.3. Denial of Cenvat credit based on Input Service Distributor (ISD) invoices.4. Denial of Cenvat credit on service tax and freight paid by another party.Analysis:1. The appeal was filed challenging the Customs, Excise & Service Tax Appellate Tribunal's order. The substantial questions of law proposed included the justification of directing to deposit 50% of Cenvat credit even when a prima facie case was found in favor of the appellant. The Tribunal's directive was questioned based on inconsistency with previous cases where stay/appeal was granted on similar issues.2. The Court admitted the appeal on the first question covering all other issues. The parties' counsels were heard, and since the matter involved a limited dispute with clear facts, the Court decided to finalize the appeal for the benefit of both sides. The appellant argued against the Tribunal's order to deposit 50% of basic Cenvat credit, while the respondent supported the Tribunal's decision.3. Upon reviewing the Tribunal's order, it was observed that a prima facie case was found in favor of the appellant. The respondent failed to provide evidence contradicting this finding. Considering the interest of the Revenue and the Tribunal's prima facie case in favor of the appellant, the Court modified the order to allow the appellant to furnish a bond for 50% of the basic Cenvat credit instead of a cash deposit. The appeal was allowed, and the questions of law were decided accordingly.