Cenvat credit on captively used capital goods supported interim relief where the revenue treated them as an intermediate product.

Cenvat credit on aluminium ingots used to make jig wires and jig rods, which were captively consumed as capital goods in manufacture of the final product, was examined on a prima facie basis. The appellant relied on Rule 57D of the Central Excise Rules, 1944, while Revenue contended that the capital goods were manufactured without payment of duty. The Tribunal noted that Rule 57D and Rule 2(k) of the Cenvat Credit Rules, 2004 were not directly equivalent, but also found that Revenue itself treated the capital goods as an intermediate product. That factual position justified interim relief, and waiver of pre-deposit with stay of recovery was granted.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the demand arising from denial of Cenvat credit on aluminium ingots used in the manufacture of captively consumed capital goods.

Analysis: The demand related to Cenvat credit taken on aluminium ingots used for manufacture of jig wires and jig rods, which were capital goods used in the manufacture of the final product. The request for credit was supported by reliance on Rule 57D of the Central Excise Rules, 1944, while the Revenue proceeded on the basis that the capital goods had been manufactured without payment of duty. On a prima facie examination, the Tribunal found no parity between Rule 57D and Rule 2(k) of the Cenvat Credit Rules, 2004, but also noted that the Revenue itself treated the capital goods as an intermediate product. That consideration was sufficient to justify interim protection.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellant.

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