Cenvat credit on capital goods: prima facie case found insufficient, so duty pre-deposit was directed and penalty waiver granted.

Cenvat credit on capital goods used in converting fine ores into briquettes was examined under Rule 3(1), which allows credit on duty-paid inputs or capital goods received for use in or in relation to manufacture of the final product. As the applicants did not establish a strong prima facie case on admissibility of credit in the stated circumstances, full waiver of pre-deposit was refused. Pre-deposit of the duty amount was directed, while pre-deposit of penalty was waived and recovery of penalty stayed pending appeal.

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Issues: Whether the applicants had made out a strong prima facie case for waiver of pre-deposit of duty and penalty in a dispute relating to Cenvat credit on capital goods used for conversion of fine ores into briquettes.

Analysis: The Tribunal noted that Rule 3(1) of the Cenvat Credit Rules permits credit on duty paid inputs or capital goods received by a manufacturer for use in or in relation to the manufacture of the final product. Since the applicants had not shown a strong prima facie case on the admissibility of credit in the circumstances, full waiver was declined.

Outcome: Pre-deposit of the duty amount was directed, the pre-deposit of penalty was waived, and recovery of penalty was stayed pending appeal.

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