Cenvat credit transition rights support waiver of balance pre-deposit and stay when concessional duty exemption is withdrawn.

A restrictive reading of the transitional Cenvat provisions was rejected because it would defeat the broader credit scheme. In the context of withdrawal of Notification No. 10/2002-C.E. and Rule 3(2) of the Cenvat Credit Rules, 2002, the appellants showed a prima facie entitlement to credit on inputs lying in stock, in process, and contained in finished goods after moving from concessional duty to higher duty. On that basis, and noting partial payment already made, the balance pre-deposit of duty and penalty was waived and recovery was stayed pending disposal of the appeals.

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Issues: Whether the appellants made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of duty and penalty, in the context of denial of Cenvat credit after withdrawal of Notification No. 10/2002-C.E. and the operation of Rule 3(2) of the Cenvat Credit Rules, 2002.

Analysis: The appellants had been paying duty at a concessional rate and had not taken Cenvat credit earlier. After withdrawal of the notification and increase in duty, they sought credit on inputs lying in stock, in process, and contained in finished goods. The Tribunal held that a restrictive reading of the transitory provisions would defeat the broader Cenvat scheme and its purpose. On the facts noted, the appellants had shown a prima facie case, and part payment had already been made.

Conclusion: The appellants were entitled to waiver of the balance pre-deposit of duty and penalty, and recovery was stayed till disposal of the appeals.

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