CENVAT credit for export under bond supported prima facie waiver of pre-deposit and stay of recovery.

CENVAT credit was treated as prima facie available where machined castings were received back after job work, duty was paid, and the goods were exported after testing. The Board's clarification was read as allowing inputs or capital goods to be removed for export under bond and treated at par with final products for credit utilisation. Because the Cenvat Credit Rules, 2002 were considered pari materia to the earlier Rule 57F(4) proviso, the credit claim was viewed favourably at the interim stage, and waiver of pre-deposit with stay of recovery was granted.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the demand of duty and penalty arising from denial of CENVAT credit on machined castings.

Analysis: The appellants had cleared unmachined castings on payment of duty for job work, received the machined goods back on duty payment, taken credit of the duty paid by the job worker, and exported the goods after testing. The Board's clarification stated that inputs or capital goods could be removed for export under bond, and that such clearance could be treated at par with final products for the purpose of credit utilisation. The provision under the Cenvat Credit Rules, 2002 was treated as pari materia to the earlier proviso to Rule 57F(4) of the Central Excise Rules.

Conclusion: The appellants were entitled to a prima facie view in their favour, and waiver of pre-deposit with stay of recovery was granted.

Final Conclusion: Interim relief was granted on the basis of a prima facie entitlement to credit and the absence of a bar on export of inputs or capital goods under bond.

Ratio Decidendi: Where the credit scheme permits export of inputs or goods under bond and the relevant provisions are pari materia, a prima facie entitlement to CENVAT credit can justify waiver of pre-deposit and stay of recovery.

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