Praveen Foundry Pvt. Ltd. vs Commr. of Cus. and C. Ex.

T.S. Sivagnanam, J.—This appeal by the assessee is directed against the Miscellaneous order passed by the Customs, Excise and Service Tax Appellate Tribunal (The Tribunal) in Miscellaneous Order No. 41310 of 2013, dated 16-5-2013. By the said order the Tribunal directed the appellant to deposit Rs. 13,00,000/- as pre-deposit within a period of six weeks. Challenging the said order, the appellant has filed this appeal and seeks admission on the following substantial questions of law:

(i) Whether the order of the Tribunal is right in directing a pre-deposit of Rs. 13 lakhs for hearing the appeal, when the appellant is not liable to pay the Excise Duty as demanded by the respondent?

(ii) Whether the order of the Tribunal directing a pre-deposit of Rs. 13 lakhs of the taxes stands vitiated inasmuch as it fails to see that the condition imposed is such, which for all intent and purport takes away the appellants vested right of appeal and works as a deterrent or disables and impedes access to a forum viz., CESTAT which is meant for redressal of the grievance of an assessee suffering an adverse order and results in rendering the statutory remedy of appeal illusory?

(iii) Whether the order of the Tribunal inasmuch as it has not even considered; nor rendered any finding on the existence or otherwise of "undue hardship" while exercising its power to dispense with pre-deposit under Section 35F of the Central Excise Act suffers from non-consideration of relevant aspect/statutory condition stands vitiated?

Learned Counsel appearing for the appellant reiterated the submission made before the Tribunal and pleaded that the amount of Rs. 13,00,000/- directed to be pre-deposited is a severe financial burden on the appellant and prayed for indulgence in the matter. Further the learned counsel relied upon the statement obtained from Mr. A. Radhakrishnan, Managing Director of the appellant under Section 14 of the Central Excise Act, 1944 wherein he deposed among other things that when the scrap was received in the factory, samples were obtained and tested in the spectrometer regarding the composition of silicon, manganese and phosphorous etc. and if the composition was as per the requirement, the consignment would be accepted; that after the MS/SS scrap were passed by the lab, the consignment will be sent for weighment and the Stores-in-charge verify the quantity and description of the scrap and after making entries, the CENVAT invoices will be sent to Central Excise Section of their unit for taking CENVAT Credit. Therefore, it is submitted by the learned counsel for the appellant that the appellant has made out a prima facie case and the balance of convenience is in their favour and therefore sought for reduction in the pre-deposit amount as directed to be deposited by the Tribunal.

Learned Counsel for the appellant also place reliance on the order passed by the Tribunal dated 29-8-2012 in respect of another assessee, viz., Sam Turbo Industries Ltd., in Application No. E/S/62/2012 in E/138/2012 and submitted that the Tribunal has granted 100% waiver of pre-deposit in that case and therefore the appellant should also be granted relief in this appeal.

We have heard Mr. A.P. Srinivas, learned Standing Counsel appearing for the respondent on the above submission.

The appellant is a manufacturer of various types of castings at their factory. They have purchased M.S. scrap and S.S. scrap from registered dealers and they have availed CENVAT Credit. In this case, which is the subject matter of this appeal, the Department Representative submitted that the appellant has availed credit on the basis of invoices showing the description of material MS Round, M.S. Wire, M.S. Wire coils etc., and on investigation it was found that the dealers supplied non-duty paid scrap procured from the market and issued invoices of M.S. Rounds, M.S. Wire, etc., in order to claim CENVAT Credit. The Tribunal after taking note of the statement given by the Managing Director of the appellant regarding the receipt of virgin materials and treated them as scrap, held that it is difficult to accept that a prudent businessman would use virgin material as scrap and such statement is contrary to the statement of the dealers and such material cannot be used in melting scrap in the furnace. Further, the Tribunal pointed out that in terms of Rule 9(5) of Cenvat Credit Rules, 2004, the burden of proof relating to admissibility of CENVAT Credit lies upon the appellant/manufacturer, who avails such credit. The Tribunal, on going through the statement, was prima facie satisfied that the appellant had not made out a prima facie for complete waiver of pre-deposit.

Though the appellant pleads financial difficulty, no material has been placed by the appellant before the Tribunal to substantiate such claim. Furthermore, though the recovery was ordered for Rs. 25,48,085/- along with penalty equivalent to the said sum, the Tribunal directed pre-deposit for only a sum of Rs. 13,00,000/-. In such circumstances, we do not find any error in the manner in which the Tribunal has exercised its direction.

Insofar as the case relating to Sam Turbo Industries Ltd., it is to be noted that the order dated 29-8-2012 is an order under an application seeking waiver of pre-deposit, the same being an interim order cannot be cited as a precedent, in the light of the fact that it is a discretionary order. Furthermore, the facts of the said case are different and the Tribunal has assigned reasons for exercising discretion for granting 100% waiver. Therefore, the said order dated 29-8-2012 does not in any manner advance the case of the appellant and the appellant has not made out a case for interference. In view of the above, this Civil Miscellaneous Appeal fails and the same is dismissed. The appellant is directed to pre-deposit the entire amount directed by the Tribunal within a period of eight weeks from today. No costs. Consequently, the connected miscellaneous petition is closed.