Cenvat credit interpretation on chassis and capital goods supports waiver of pre-deposit and stay of recovery.

Interpretation of the explanation to Rule 3 of the Cenvat Credit Rules, 2002 and the conditions in Serial No. 214 of Notification No. 6/2002-C.E. governed whether Cenvat credit on chassis, inputs and capital goods was barred, particularly where the notification required that no credit of duty paid on chassis under heading 87.06 had been taken. The appellant had availed credit on capital goods and certain inputs, and the applicability of the notification to that factual setting was not conclusively shown. Given the prima facie case on statutory interpretation, waiver of pre-deposit was granted and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery pending appeal on the question whether Cenvat credit taken on chassis, inputs and capital goods was hit by the explanation to Rule 3 of the Cenvat Credit Rules, 2002 and by Notification No. 6/2002-C.E.

Analysis: The dispute turned on the interpretation of the explanation appended to Rule 3 of the Cenvat Credit Rules, 2002 and the scope of Serial No. 214 of Notification No. 6/2002-C.E., particularly the attached condition that no credit of duty paid on chassis under heading 87.06 should have been taken. It was noted that the appellant had availed credit on capital goods and certain inputs, and the applicability of the notification to such a case was not conclusively established. As the issue involved statutory interpretation and the appellant had shown a prima facie case, pre-deposit was not warranted at that stage.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed till disposal of the appeal.

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