Cenvat credit timing and depreciation bar: premature availment drew partial pre-deposit, while the depreciation objection failed prima facie.

Premature availment of the full Cenvat credit on capital goods, where the remaining credit was otherwise admissible in the next financial year, was treated as an irregular timing issue rather than a ground for complete waiver of pre-deposit; the consequence was confined to interest for the period of wrongful availment and a partial deposit was required. A depreciation-based objection to the credit was not prima facie established because the assessee produced a Chartered Accountant's certificate and invoice-wise details showing depreciation was claimed only on the basic value and sales tax, not on excise duty. The stay was therefore granted only to the extent of the balance demand, interest and penalty after partial deposit.

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Issues: (i) whether the appellant was entitled, at the stay stage, to waiver of pre-deposit when the full Cenvat credit had been taken at the time of receipt of capital goods though the balance credit was otherwise admissible in the next financial year; (ii) whether the allegation that Cenvat credit was wrongly taken in contravention of the bar against availing depreciation on the duty element of capital goods was prima facie established.

Issue (i): whether the appellant was entitled, at the stay stage, to waiver of pre-deposit when the full Cenvat credit had been taken at the time of receipt of capital goods though the balance credit was otherwise admissible in the next financial year.

Analysis: The credit was admittedly taken in excess of the stage permitted by the Cenvat Credit Rules, but the appellant was otherwise eligible for the remaining 50% credit in the next financial year. On that footing, the irregularity was confined to premature availment, and the liability arising from that irregular availment was treated as confined to interest for the period of wrongful availment. This did not justify complete waiver of pre-deposit.

Conclusion: The appellant was not entitled to full waiver on this issue.

Issue (ii): whether the allegation that Cenvat credit was wrongly taken in contravention of the bar against availing depreciation on the duty element of capital goods was prima facie established.

Analysis: The appellant produced a Chartered Accountant's certificate and invoice-wise details indicating that depreciation had been claimed only on the basic value and sales tax, excluding excise duty. The rejection of that certificate was not supported by a clear explanation of the alleged forgery, and no enquiry with the income-tax department was shown to have been made. On the material before the Tribunal, the department's objection on this ground did not appear to be correct prima facie.

Conclusion: The departmental allegation under the depreciation bar was not prima facie established.

Final Conclusion: The stay application succeeded only to a limited extent. The appellant was directed to make a partial deposit, and on such deposit the balance demand, interest, and penalty were stayed pending disposal of the appeal.

Ratio Decidendi: At the stay stage, where credit is irregularly taken only prematurely but the substantive entitlement arises in the next period, the consequence is ordinarily limited to interest and partial pre-deposit; a depreciation-based objection must be supported by clear, cogent material before it can justify denial of relief.

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