Rule 4(5)(a) Cenvat dispute on scrap sent to a job worker: prima facie case found, pre-deposit waived.

Rule 4(5)(a) of the Cenvat Credit Rules, 2004 was construed in a dispute over waste and scrap sent to a job worker for reprocessing and return. The appellant argued that the arrangement was covered by prior tribunal view and, in any event, was revenue neutral because credit would arise at the job-worker stage and again on the returned brass wire. On that basis, the tribunal found a prima facie case for waiver of pre-deposit. The pre-deposit of duty, interest and penalty was waived and recovery stayed pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in a dispute concerning removal of waste and scrap to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, and whether the matter was revenue neutral.

Analysis: The issue involved interpretation of Rule 4(5)(a) of the Cenvat Credit Rules, 2004 in the context of scrap and waste sent to a job worker for reprocessing and return. It was noted that the appellant contended that the activity was covered by the earlier tribunal view and that, in any event, the exercise was revenue neutral because credit would be available at the job-worker stage and again on the returned brass wire. On that basis, the question required serious consideration and the appellant was found to have shown a prima facie case.

Conclusion: The condition of pre-deposit of duty, interest and penalty was waived and recovery was stayed pending disposal of the appeal.

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