High Court quashes CESTAT order on predeposit, directs appeal hearing without payment.

The High Court considered whether the CESTAT was justified in directing the assessee to make a predeposit of Rs.1.5 crores for entertaining the appeal against the order-in-original dated 30th September 2009. The High Court opined that if the Commissioner's representation to the CBEC regarding the audit party's objections being erroneous was not proven to be false, the demands confirmed based on the audit report could not be upheld. Therefore, it was deemed appropriate to hear the appeal before CESTAT without requiring any predeposit. Consequently, the High Court quashed the impugned order passed by the CESTAT and directed the CESTAT to hear the appeal on merits without insisting on any predeposit.

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Issues involved: Justification of directing the assessee to make predeposit for entertaining the appeal against the order-in-original dated 30th September 2009.

Summary:
1. The High Court considered whether the CESTAT was justified in directing the assessee to make a predeposit of Rs.1.5 crores for entertaining the appeal against the order-in-original dated 30th September 2009.

2. The duty amounting to Rs.33.64 crores was confirmed based on the audit report, where the assessee had imported consumables valued at Rs.1,21,73,788 in addition to imports valued at Rs.5.69 crores. The CESTAT directed the assessee to make a predeposit of Rs.1.5 crores, leading to the present appeal being filed.

3. The appellant argued that the Commissioner of Central Excise, Thane - I had stated in a letter that the objections raised by the audit party were erroneous. Even though this letter was presented to the CESTAT, it was not considered due to the demand being confirmed after the letter was issued.

4. The High Court opined that if the Commissioner's representation to the CBEC regarding the audit party's objections being erroneous was not proven to be false, the demands confirmed based on the audit report could not be upheld. Therefore, it was deemed appropriate to hear the appeal before CESTAT without requiring any predeposit.

5. Consequently, the High Court quashed the impugned order passed by the CESTAT and directed the CESTAT to hear the appeal on merits without insisting on any predeposit. The CESTAT was instructed to make its decision without being influenced by the High Court's observations. The appeal was disposed of with no order as to costs.

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