Cenvat credit on inputs used in an effluent treatment plant supported waiver of pre-deposit and stay of recovery.

At the prima facie stage, waiver of pre-deposit and stay of recovery were granted on a Cenvat credit demand relating to duty paid on sulphuric acid used in an effluent treatment plant. The plant was treated as part of the manufacturing activity because untreated effluents could not be discharged directly, supporting the view that the credit claim raised a prima facie case in favour of the appellant. On that basis, pre-deposit of the demand and penalty was waived and recovery was stayed pending disposal of the appeal.

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Issues: Whether waiver of pre-deposit and stay of recovery should be granted in respect of the Cenvat credit demand relating to duty paid on Sulphuric Acid used in the effluent treatment plant.

Analysis: The issue was considered at the prima facie stage. The effluent treatment plant was treated as part of the manufacturing activity, since untreated effluents could not be discharged as such. On that basis, a prima facie case was found in favour of the appellant.

Outcome: Pre-deposit of the Cenvat credit demand and penalty was waived and recovery was stayed pending disposal of the appeal.

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