Cenvat credit under exemption notifications: prima facie no wrongful availment found, so pre-deposit and recovery stay were granted.

Waiver of pre-deposit was considered in a dispute over alleged wrongful availment and utilisation of Cenvat credit under exemption notifications. The demand rested on the claim that credit had been taken contrary to Notification No. 30/04-C.E., which required non-availment of Cenvat credit for full exemption. On a prima facie view, the assessee had discharged duty under Notification No. 29/04-C.E. and had not, in substance, taken the benefit of the full exemption under Notification No. 30/04-C.E.; accordingly, the demand and penalty were not justified. Waiver of pre-deposit and stay of recovery of the adjudged dues were granted.

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Issues: Whether waiver of pre-deposit and stay of recovery were justified in respect of the demand and penalty arising from alleged wrong availment and utilisation of Cenvat credit under the exemption notifications.

Analysis: The demand was founded on the allegation that Cenvat credit had been availed and utilised contrary to Notification No. 30/04-C.E. dated 09.07.2004, which required forfeiture of credit and non-availment of Cenvat credit for full exemption. It was noted that the assessee had discharged duty under Notification No. 29/04-C.E. dated 09.07.2004 and, in substance, had not taken the benefit of the full exemption under Notification No. 30/04-C.E. The prima facie view was therefore that the demand and penalty were not justified.

Conclusion: Waiver of pre-deposit and stay of recovery of the adjudged dues were granted.

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