Rule 6 exemption for international competitive bidding supplies supports waiver of pre-deposit and stay of recovery.

Captive consumption exemption was treated as unavailable by the department for alleged non-compliance with Rule 6 of the Cenvat Credit Rules, 2001, but the assessee relied on Rule 6(6)(vii) and the exemption for supplies made against international competitive bidding projects. On that basis, it demonstrated a prima facie case that the 5% or 10% payment under Rule 6 did not apply to the clearances in question. The pre-deposit of duty, interest and penalty was therefore dispensed with and recovery was stayed pending the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of duty, interest and penalty arising from denial of exemption under Notification No. 67/95-C.E.

Analysis: The demand arose because final products were cleared without duty under the exemption for supplies made against international competitive bidding, and the department treated the captive consumption exemption as unavailable for want of compliance with Rule 6 of the Cenvat Credit Rules, 2001. The assessee, however, showed that such final products were covered by clause (vii) of Rule 6(6), under which the obligation to pay 5% or 10% of value under Rule 6 did not apply where goods were supplied against the specified notifications for I.C.B. projects. On that basis, the appellant established a prima facie case on merits.

Conclusion: Pre-deposit of duty, interest and penalty was dispensed with and recovery was stayed pending the appeal.

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