Cenvat credit pre-deposit waiver turned on whether cleared goods were inputs "as such" under the rule

The dispute concerned whether tubes and flaps cleared under an OEM arrangement amounted to clearance of inputs "as such" under Rule 3(4)(c) of the Cenvat Credit Rules, 2004. On a prima facie view, the Tribunal found that the activity described did not appear to constitute clearance of inputs as such, so the cited provision was not shown to apply at the pre-deposit stage. Full waiver of pre-deposit was therefore granted, and coercive recovery was kept in abeyance pending disposal of the appeals.

---

---

Issues: Whether the appellants were required to make the demanded pre-deposit in the light of the dispute as to whether the impugned clearances of tubes and flaps could be treated as clearance of inputs "as such" under the Cenvat credit scheme.

Analysis: The dispute turned on the meaning of "as such" in Rule 3(4)(c) of the Cenvat Credit Rules, 2004. The Tribunal noted that the goods were assembled and cleared to original equipment manufacturers in terms of the arrangement, and that the revenue's case proceeded on the footing that the inputs were cleared as such. On a prima facie assessment, the Tribunal found that the activity described could not at that stage be said to amount to clearance of the inputs as such, and therefore the cited provision did not appear to apply. In that view, the demand did not justify insisting on pre-deposit.

Conclusion: The appellants were granted full waiver of pre-deposit of the entire amount demanded, and no coercive recovery was to be taken pending disposal of the appeals.

Final Conclusion: Interim relief was granted in full, with the demand kept in abeyance for recovery purposes until the appeals are heard.

Ratio Decidendi: Where the impugned demand is only prima facie shown to be outside the scope of clearance of inputs "as such" under the relevant Cenvat provision, full waiver of pre-deposit can be granted.

---