Cenvat credit reversal on hazardous manufacturing waste was not required for the earlier period, supporting complete pre-deposit waiver.

Complete waiver of pre-deposit was justified where waste arose incidentally during manufacture, the goods could not be cleared because of hazardous nature and environmental restrictions, and remission of duty had been sought and granted. The assessee used the inputs in manufacture of the final excisable product, and the waste was not intentionally produced. The note further states that, for the relevant period, the then-existing rule did not require reversal of Cenvat credit on inputs contained in such waste; the later amendment imposing an express reversal requirement applied only from 7 September 2007. On that basis, the assessee had a strong prima facie case and no coercive recovery was warranted pending the appeals.

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Issues: Whether complete waiver of pre-deposit was justified in a case involving remission of duty on waste arising in the manufacture of goods and the alleged liability to reverse Cenvat credit on inputs contained in such waste.

Analysis: The goods could not be cleared because of their hazardous nature and the requirements under the environmental law, and remission had been sought and granted. The inputs were used in the manufacture of the final excisable product, and the waste arose only during the manufacturing process rather than being intentionally produced. The reasoning also noted that the earlier rule position did not require reversal in such circumstances, that the cited Larger Bench decision supported the assessee, and that the amendment introducing an express reversal requirement operated only from 7-9-2007, whereas the dispute period was earlier.

Conclusion: The assessee had a strong prima facie case and was entitled to complete waiver of pre-deposit, with no coercive recovery pending disposal of the appeals.

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