To be fair, the default set up (in CS-Cart 2.2.3 anyway) produces a 200 error, which search engines don't like either.I was using this by your suggestion for last 6 months but in last few days I came to know by some redirect checkers this method cause 302 redirect which is not SEO friendly now Google webmaster tool is also reporting soft404s
Going to raise a support ticket on this issue, the launch of our new site could really do without getting hampered by this.