CENVAT credit on sister-unit stock transfers was treated as revenue neutral, supporting waiver of pre-deposit and stay.

CENVAT credit on supplementary invoices for stock-transfer clearances between sister units was treated, prima facie, as revenue neutral because duty paid by one unit would be available as credit to the other. On that basis, the bar on credit under Rule 9(b) of the CENVAT Credit Rules, 2004 was viewed as applying only to sales, and Rule 7(1)(b) of the CENVAT Credit Rules, 2002 was considered pari materia with that rule. For interim relief, the demand, interest and penalty were held prima facie unsustainable, and waiver of pre-deposit with stay of recovery was granted.

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Issues: Whether, on a prima facie view, the appellant was entitled to waiver of pre-deposit and stay of recovery in respect of the demand arising from CENVAT credit taken on duty paid through supplementary invoices for stock-transfer clearances between sister units.

Analysis: The disputed credit related to clearances of dough by one unit to another unit of the same entity for further manufacture. The removal was by stock transfer, and the duty position was treated as revenue neutral because duty paid by one sister unit would be available as credit to the other. It was also held, prima facie, that the bar on availing credit on supplementary invoices under Rule 9(b) of the CENVAT Credit Rules, 2004 operated only in cases of sale, and that Rule 7(1)(b) of the CENVAT Credit Rules, 2002 and Rule 9(b) of the CENVAT Credit Rules, 2004 were pari materia.

Conclusion: The demand, interest, and penalty were held prima facie unsustainable for the purpose of interim relief, and waiver of pre-deposit with stay of recovery was granted.

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