CENVAT credit utilisation for inputs cleared as such was restricted, with stay granted only after pre-deposit.

At the interim stage, the Tribunal treated Rule 17 of the Central Excise Rules, 2002 as applying to excisable goods manufactured by the assessee and not, prima facie, to inputs cleared as such. It further noted that Rule 3(4) of the CENVAT Credit Rules, 2004 governs the utilisation of credit and does not support treating such inputs as final products for duty payment. In the absence of pleaded financial hardship and given the limited support from the cited earlier order, the appellant was required to make a pre-deposit of Rs. 1 crore, and the balance demand was stayed only upon compliance.

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Issues: Whether the appellant was entitled, at the interim stage, to use CENVAT credit for duty payment on inputs cleared as such from a 100% E.O.U. and whether the balance pre-deposit and stay of recovery should be waived pending appeal.

Analysis: The Tribunal held that Rule 17 of the Central Excise Rules, 2002 applies to excisable goods manufactured by the assessee and does not, prima facie, extend to inputs cleared as such. It further held that Rule 3(4) of the CENVAT Credit Rules, 2004 governs the permitted utilization of credit and does not support treating inputs cleared as such as final products. The Tribunal also noted the period involved, the limited support from the cited earlier order, and the absence of pleaded financial hardship.

Conclusion: The appellant was directed to make a pre-deposit of Rs. 1 crore, and only on compliance was the balance demand stayed pending disposal of the appeal.

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