Cenvat credit on workshop consumables: prima facie entitlement to waiver of pre-deposit and stay of recovery.

Under the Cenvat Credit Rules, 2002, Explanation 2 to the definition of inputs in Rule 2 extended to goods used in the manufacture of capital goods that were further used in the factory of the manufacturer. On that basis, credit taken on welding electrodes, plain plates, jointing sheets and V-belts, said to be used in the factory, disclosed a prima facie case for interim relief. The appellant was therefore granted waiver of pre-deposit and stay of recovery of duty and penalty pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of duty and penalty on credit taken on welding electrodes, plain plates, jointing sheets and V-belts.

Analysis: The relevant period was during the currency of the Cenvat Credit Rules, 2002. Explanation 2 to the definition of inputs under Rule 2 covered goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. The items in question were stated to be used in the factory of the manufacturer, and on that basis a prima facie case was made out for interim relief.

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

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