Cenvat inputs and job-work provisions can justify waiver of pre-deposit where processed goods generate steam or electricity for manufacture.

Rule 2(f) of the Cenvat Credit Rules, 2001 treated goods used in or in relation to manufacture, including fuel used to generate electricity or steam for manufacture of final products, as inputs. Rule 4(5) also permitted sending inputs, including after partial processing, to a job worker if the goods were received back. On that reading, and given the admitted use of electricity and steam in manufacture, the applicant established a strong prima facie case against immediate recovery. The waiver of pre-deposit was allowed and recovery of duty and penalty was stayed pending the appeal.

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Issues: Whether the applicant made out a prima facie case for waiver of pre-deposit and stay of recovery in view of the definition of "inputs" and the facility of sending inputs, after partial processing, to a job worker.

Analysis: The application turned on the scope of Rule 2(f) of the Cenvat Credit Rules, 2001, which treats as inputs goods used in or in relation to manufacture and goods used as fuel for generation of electricity or steam for manufacture of final products. The request also relied on Rule 4(5) of the Cenvat Credit Rules, 2001, permitting sending of inputs as such or after partial processing to a job worker, provided the goods are received back. On these provisions, and on the admitted use of the electricity and steam in manufacture, the applicant showed a strong prima facie basis against immediate recovery.

Conclusion: The application for waiver was allowed and recovery of the duty and penalty was stayed during pendency of the appeal.

Ratio Decidendi: Where the statutory definition of inputs and the job-work provision support the applicant's case, and the processed material is used to generate electricity or steam for manufacture, a strong prima facie case for waiver of pre-deposit is made out.

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