Cenvat credit on capital goods turns on factory use; absence of contrary finding supported waiver of pre-deposit.

Rule 2(b) of the Cenvat Credit Rules, 2002 defines capital goods by reference to specified tariff chapters and use in the manufacturer's factory for producing final products. The Tribunal noted that, although the Commissioner found the machinery was manufactured by another entity, there was no finding that it had been used in that entity's factory for manufacture of final products. On that factual basis, the appellant showed a strong prima facie case for interim relief, justifying waiver of pre-deposit and stay of recovery pending the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to denial of Cenvat credit on capital goods.

Analysis: Rule 2(b) of the Cenvat Credit Rules, 2002 defines capital goods as goods falling under the specified chapters used in the factory of the manufacturer of the final product. The Commissioner had found that the machinery was manufactured by another entity, but there was no finding that the machinery was used in that entity's factory for manufacture of the final products. In these circumstances, the appellant established a strong prima facie case for interim relief.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery pending the appeal.

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