Cenvat credit reversal demand failed on prima facie finding that the product was dust, not saw dust, securing stay.

The Tribunal held that the demand under Rule 6(3) of the Cenvat Credit Rules depended on treating the final-stage residue as saw dust, an exempted product. It found that the process in the show-cause notice did not involve sawing and that the material produced was dust, not saw dust. On that prima facie basis, the appellant was found entitled to waiver of pre-deposit and stay of recovery of the duty and penalty pending final disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the duty and penalty demand raised under Rule 6(3) of the Cenvat Credit Rules.

Analysis: The demand was founded on the premise that the dust generated at the final stage of manufacture was "saw dust" and, being an exempted product, attracted the obligation under Rule 6(3). The order records that the process described in the show-cause notice did not involve sawing and that the material produced was a dust, not saw dust. On that basis, the Tribunal found a prima facie case in favour of the appellant against the demand.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery of the duty and penalty till final disposal of the appeal.

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