Cenvat credit on pre-2000 capital goods turns on the scheme in force when goods were received; full stay refused.

Entitlement to Cenvat credit on capital goods received before 1-4-2000 was assessed by reference to the Modvat regime and the transitional treatment of unutilised credit then in force, not the later Cenvat scheme. Because the goods were received in January and February 2000 while the appellant operated under the compounded levy scheme, the request for complete dispensation of duty and penalty was rejected. Limited interim relief was nevertheless granted against the balance demand on payment of a directed amount within time, leaving the stay application only partly allowed.

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Issues: Whether the appellant was entitled to dispensation or stay of duty and penalty on the claim of Cenvat credit in respect of capital goods received before 1-4-2000.

Analysis: The capital goods were received in January and February 2000 when the appellant was operating under the compounded levy scheme. The available credit position was governed by the then prevailing Modvat framework and the transitional arrangement for unutilised credit; the later Cenvat scheme applied to goods received on or after 1-4-2000. On the facts, the Tribunal accepted that the appellant had not made out a case for total dispensation, but found it to grant limited interim relief against the balance demand.

Conclusion: The claim for complete dispensation of duty and penalty was rejected, but partial stay was granted on payment of Rs. 4 lakhs within the stipulated time.

Final Conclusion: The stay application was allowed only to a limited extent, leaving the bulk of the duty and penalty stayed upon compliance with the directed payment.

Ratio Decidendi: Credit entitlement for capital goods had to be tested with reference to the scheme in force when the goods were received, and the later transitional Cenvat provision could not be invoked to claim full interim relief for goods received before the commencement date of the new scheme.

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