The Appellant’s composite manufacturing unit was having interdependent and integrated plants for manufacturing sugar and alcohol. The Appellant was manufacturing sugar and molasses from sugarcane. The assessee claimed benefit of exemption notification No. 03/2005 in respect of Rectified Spirit (RS), Absolute Alcohol (AA) Extra Neutral Alcohol (ENA), all conforming to the alcohol volume in excess of 95%. The Excise authorities issued a Show Cause Notice (SCN), inter alia, contending that the exemption was inapplicable and also stated that the cenvat credit cannot be claimed by the assessee. On appeal to the CESTAT, an obligation to deposit Rs.5 crores, as pre-condition for hearing, was imposed upon the assessee.
The question of law urged by the appellant was:
“Whether in the instant case the direction of the CESTAT to deposit Rs.5 crores as pre-condition for the hearing of the appeal was justified.”
Revenue relies upon the Order in Original and contended
Held that, Prima facie, it appears that revenue’s argument is at loggerheads with the notification. Reliance was also placed on the judgment of Bombay High Court in case of Niphad Sakhar Karkhana Ltd. vs. CEE, 2014 (300) E.L.T. 66 (Bom.) submitted by the appellant.
As a result the impugned direction to deposit Rs.5 crores was set aside with direction to revenue that the assessee’s appeal shall be heard on merits and disposed of in accordance with law.
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