Cenvat credit on stock inputs and semi-finished goods was not prima facie available after exemption, prompting a pre-deposit direction.

Cenvat credit was examined in relation to inputs lying in stock and inputs embedded in semi-finished goods on the date the final product became exempt. Rule 6(1) of the Cenvat Credit Rules, 2004 was applied on a prima facie basis to deny credit for inputs used in exempted goods, and the earlier authority cited by the assessee was distinguished because it arose under different facts and a different rule context. As complete waiver was not justified at the stay stage, the tribunal required a substantial pre-deposit of Rs. 50,00,000 while leaving the merits of the credit dispute open.

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Issues: Whether Cenvat credit was admissible on inputs as such and on inputs contained in semi-finished goods lying in stock on the date when the final product became exempt, and whether pre-deposit should be directed under the appeal-stage discretion.

Analysis: Rule 6(1) of the Cenvat Credit Rules, 2004 denies credit on inputs used in the manufacture of exempted goods. On a prima facie view, inputs as such in stock and inputs contained in semi-finished goods on the date of exemption fall within that restriction. The earlier authority relied upon by the assessee was distinguished on the basis that the factual setting there involved a different rule and different stage of clearance of the final product. In the circumstances, complete waiver was not granted, though a lenient approach was adopted on the quantum of deposit.

Conclusion: The assessee was held not to have a prima facie case for full waiver in respect of the disputed credit on inputs in stock and semi-finished goods, and was directed to make a pre-deposit of Rs. 50,00,000.

Final Conclusion: The order granted only partial relief at the stay stage by requiring a substantial pre-deposit, while leaving the merits of the credit dispute open for adjudication in the appeal.

Ratio Decidendi: Credit under the Cenvat scheme is not prima facie available for inputs used in exempted final products, including inputs embedded in semi-finished goods in stock on the date of exemption.

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