Pre-deposit waiver in CENVAT credit dispute on common inputs used in exempted and dutiable goods; recovery stayed pending appeal.

Common inputs used in both exempted and dutiable products raised a prima facie dispute on credit entitlement and the need for separate accounts, but that factual issue was left for final hearing. The Tribunal treated the relatively small credit involved against a much larger demand and equal penalty as relevant to prima facie hardship, and noted comparable cases where similar relief had been granted. The Rajasthan High Court ruling cited by the department was distinguished because it concerned reversal under a notification condition before removal of goods. On that basis, the assessee was found to have established a prima facie case, pre-deposit was waived, and recovery was stayed pending appeal.

---

---

Issues: Whether, on the facts of the case, the assessee had made out a prima facie case for waiver of pre-deposit and stay of recovery of the demand and penalty pending disposal of the appeal.

Analysis: The disputed credit related to common inputs used in exempted and dutiable products, and the amount of credit involved was about Rs. 7.5 lakhs, whereas the demand raised was about Rs. 1.4 crores with equal penalty. The Tribunal treated this as a relevant factor in assessing prima facie hardship and also noted that similar relief had been granted in comparable cases. The objection that the assessee should have maintained separate accounts was noted, but the factual dispute on that aspect was left for final hearing. The reliance placed on the Rajasthan High Court decision was distinguished as concerning the condition of a notification requiring reversal before removal of goods.

Conclusion: The assessee was held to have established a prima facie case, pre-deposit was waived, and recovery of the impugned dues was stayed until disposal of the appeal.

---