M/S Dhampur Sugar Mills LTD. vs. Commissioner Of Customs And Central Excise

Held

The Court held that prima facie, the issue on which adjudication was sought and the issue that was adjudicated appear to be different. Since the issue on merits had not been opened in the show cause notice, a prima facie case was made out for grant of interim protection. The Court set aside the CESTAT's order dated 29.10.2010. The appeal was disposed of with a direction to the Tribunal to hear and decide the main appeal within three months. For a period of three months or until the disposal of the appeal, whichever is earlier, coercive measures were stayed, subject to the appellant securing the disputed amount of CENVAT credit by maintaining equivalent credit entries in the Electronic Credit Ledger under the GST regime.

Facts

M/s Dhampur Sugar Mills Ltd. (the appellant) is challenging an order dated 29.10.2010 passed by the Central Excise and Service Tax Appellate Tribunal (CESTAT) on a stay application. The CESTAT had rejected the appellant's stay application against a duty demand but granted stay on interest and penalty. The appellant's appeal to the High Court concerns the CESTAT's refusal to grant a waiver of pre-deposit. The appellant argues that the original adjudication order went beyond the scope of the show cause notices issued for the tax periods in question. The revenue contends that the appellant has enjoyed a stay for a considerable period, including through a previous writ petition.

Key Issues

1. Whether the Tribunal was legally justified in refusing to grant a waiver of pre-deposit, by not examining if the order-in-original exceeded the scope of the show cause notice, thereby failing to establish a prima facie case (under Section 35F of the Central Excise Act, 1944, as it existed then, and principles of natural justice)? Petitioner's arguments: The adjudicating authority travelled beyond the scope of the show cause notices dated 19.10.2007 and 29.4.2008. The notices only questioned the disallowance of CENVAT credit on the basis that goods did not fall under 'Capital Goods', not on the merits of purchase, receipt, or utilization. The adjudication order erroneously rejected the claim based on utilization, which was not an issue raised. The Tribunal failed to consider this crucial aspect. Revenue's arguments: The assessee has enjoyed a stay for a long time, initially granted in a writ petition in 2011, which was later rejected on territorial jurisdiction. The appellant is now seeking a stay again in this appeal.