Pre-deposit requirement for appeal hearing set aside after prima facie view favoured exemption notification and tariff regime

A pre-deposit condition requiring deposit of Rs. 5 crores before hearing the appeal was found unsustainable where the Court, on a prima facie view, considered the revenue's objection inconsistent with Notification No. 3/2005 and the tariff regime effective from 01.03.2005. The assessee's claim involved exemption for alcohol products and a dispute over the availability of Cenvat credit. In light of that prima facie assessment, the Tribunal's heavy deposit direction was set aside and the appeal was ordered to be heard on merits.

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Issues: Whether the direction requiring deposit of Rs. 5 crores as a pre-condition for hearing the appeal was justified.

Analysis: The assessee's unit claimed exemption under Notification No. 3/2005 in relation to alcohol products, while the revenue disputed applicability of the notification and the availability of Cenvat credit. The Court found, at least prima facie, that the revenue's stand was inconsistent with the notification and the tariff regime that came into force from 01.03.2005. In view of that prima facie assessment, the heavy pre-deposit ordered by the Tribunal could not be sustained.

Conclusion: The direction to deposit Rs. 5 crores was set aside and the appeal was directed to be heard on merits.

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