Pre-deposit waiver for mixed-use capital goods credit dispute where dies blocks served exempted and dutiable production

Where dies blocks were used partly for exempted goods and partly for dutiable clearances, the dispute centred on reversal of credit taken on the inputs used to manufacture the capital goods. The exemption under Notification No. 67/95-C.E. was not in dispute, and the invoices and pleadings supported the claim of mixed use. On that basis, credit on inputs used for manufacture of capital goods could not be denied at the interim stage when the capital goods were used for both exempted and dutiable final products. A prima facie case for waiver of pre-deposit was made out, and pre-deposit was waived.

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Issues: Whether the requirement of pre-deposit of duty demand was to be waived where the impugned dies block were used for manufacture of both exempted goods and dutiable goods.

Analysis: The exemption under Notification No. 67/95-C.E. was not in dispute. The dispute was confined to reversal of credit taken on dies block. The appellants produced invoices and also relied on the pleading that the impugned dies were used partly for exempted goods and partly for dutiable goods cleared to Defence Establishment. On that basis, the credit taken on inputs used in the manufacture of capital goods could not be denied at the interim stage if the capital goods were used for both exempted and dutiable final products.

Conclusion: The appellants made out a prima facie case for waiver of pre-deposit, and the requirement of pre-deposit was waived.

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