Cenvat credit on steel items requires proof of use in fabrication of capital goods; unsupported claims justify only conditional waiver.

Steel items such as angles, channels, plates and sheets are not capital goods by themselves and can qualify for Cenvat credit only if the manufacturer proves they were used in fabrication of capital goods for use in the factory. The burden of proving admissibility lies on the manufacturer, and it may be discharged through contemporaneous evidence such as departmental correspondence, technical certificates, designs, or reflection of the fabrication in returns. On the record, the claimed use was unsupported by such evidence and the RG-1 extract did not establish use of the disputed steel items for the relevant period, so a prima facie case for full waiver was not made out. Conditional waiver of pre-deposit was granted, with balance recovery stayed on compliance.

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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 Cenvat credit taken on steel items claimed to have been used in fabrication of capital goods.

Analysis: Steel items such as angles, channels, plates and sheets are not capital goods by themselves and could qualify for Cenvat credit only if shown to have been used in fabrication of capital goods for use in the factory. The burden of establishing admissibility of credit lay on the manufacturer, and this burden could be discharged by contemporaneous evidence such as communication to the department, technical certificates, designs, or reflection of such fabrication in ER-1 returns. On the record, the claimed use was not supported by such evidence, the RG-1 extract did not establish use of the disputed steel items for the relevant period, and the appellant therefore failed to show a prima facie case for complete waiver.

Conclusion: The appellant was not entitled to full waiver of pre-deposit. A conditional waiver was granted only on deposit of Rs. 50,000, with balance recovery stayed upon compliance.

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