Cenvat credit on export inputs remains a debatable issue; unconditional stay of recovery granted pending appeal.

Where entitlement to Cenvat credit on inputs used in goods exported under the DFIA scheme was found to be debatable, the tribunal accepted that the appellant had shown a prima facie case. The appellant relied on a DGFT clarification stating that, where inputs used in the export product were procured on payment of applicable duty, Cenvat credit would be available under the Cenvat Credit Rules. On that basis, unconditional stay of recovery was granted pending appeal, and demand recovery was kept in abeyance during the pendency of the proceedings.

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Issues: Whether the appellant had made out a prima facie case for unconditional stay of recovery in relation to denial of Cenvat credit on inputs used in goods exported under the DFIA scheme.

Analysis: The order records that the appellant had not made any import under the DFIA scheme and relied on a clarification from the DGFT indicating that where inputs used in the export product were procured on payment of applicable duty, Cenvat credit would be available under the Cenvat Credit Rules. On that basis, the Tribunal held that the question was debatable and that the appellant had established a prima facie case.

Conclusion: Unconditional stay of recovery was granted pending the appeal.

Final Conclusion: The matter was protected by interim relief and the demand recovery was kept in abeyance during the pendency of the appeal.

Ratio Decidendi: Where the entitlement to Cenvat credit on exported goods presents a debatable issue and a prima facie case is shown, unconditional stay of recovery may be granted pending appeal.

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