Cenvat credit payment supports full pre-deposit waiver and stay of recovery where the challenge is prima facie strong.

A service tax dispute concerned whether tax discharged through available Cenvat credit justified full waiver of pre-deposit and stay of recovery. The Tribunal accepted, on a prima facie view, that the appellant had paid the disputed service tax through input service credit and that the Revenue's objection raised an arguable issue under the Cenvat Credit Rules. Because the challenge disclosed a strong case on merits, full waiver of pre-deposit was granted and coercive recovery was stayed until disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for full waiver of the pre-deposit and stay of recovery in a service tax dispute involving payment of tax through Cenvat credit.

Analysis: The appellant had discharged the service tax liability through available input service credit. The dispute turned on the Revenue's objection that credit could be used only to the extent permitted under the Cenvat Credit Rules. On a prima facie view, the Tribunal accepted that the appellant had in fact paid service tax through credit and that the challenge raised a strong arguable case on merits.

Conclusion: Full waiver of the pre-deposit was granted and coercive recovery was stayed till disposal of the appeal.

Ratio Decidendi: Where the appellant has discharged the disputed tax liability through Cenvat credit and the challenge discloses a strong prima facie case, full waiver of pre-deposit and interim stay of recovery may be granted.

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