Cenvat credit on capital goods: incomplete installation defeated full waiver of pre-deposit, with only partial stay relief granted.

Rule 4(2)(b) of the Cenvat Credit Rules, 2001 allowed only 50% of credit on capital goods initially, with the balance becoming available in a later financial year when the goods were in possession and use in manufacture. On the material considered, the machine was not fully installed when the remaining credit was taken, so the applicants did not establish a strong prima facie case for complete waiver of pre-deposit. The argument that credit could be allowed to the extent part of the machinery had been installed was left for examination in the main appeal, but it was insufficient to justify full stay relief at the interim stage. Full waiver was therefore declined and partial pre-deposit was directed.

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Issues: Whether waiver of pre-deposit could be granted in full in a dispute relating to disallowance of credit on capital goods under Rule 4(2)(b) of the Cenvat Credit Rules, 2001.

Analysis: The rule permitted only 50% credit initially, with the balance admissible in a subsequent financial year when the capital goods were in possession and use in the manufacture of final products. On the material before it, the machine had not been fully installed when the balance credit was taken. The contention that only part of the machinery had been installed and credit was admissible to that extent was left to be examined at the appeal stage, but it was not sufficient to justify complete waiver at the stay stage. The applicants were found not to have made out a strong prima facie case for full waiver of pre-deposit.

Conclusion: Full waiver of pre-deposit was declined and a partial pre-deposit was directed, with stay of recovery granted upon compliance.

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