Cenvat credit reversal on written-off raw materials justified waiver of pre-deposit where the relevant provision applied later.

Pre-deposit was dispensed with in a stay matter involving reversal of Cenvat credit on written-off raw materials because the reversal provision took effect from 1 May 2007, while the write-off related to 2005-06. The absence of any allegation of clandestine removal of the inputs supported a prima facie case for interim relief. As a result, pre-deposit of duty and interest was waived and recovery of penalty was stayed during the appeal.

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Issues: Whether the condition of pre-deposit of duty, interest and penalty should be dispensed with in a stay application concerning reversal of Cenvat credit on written-off raw materials.

Analysis: The relevant reversal provision was introduced with effect from 01.05.2007, while the credit-related write-off pertained to the period 2005-06. No allegation of clandestine removal of the inputs was made. On that basis, a prima facie case was found for dispensing with the pre-deposit condition.

Outcome: Pre-deposit of duty and interest was dispensed with and recovery of penalty was stayed during the pendency of the appeal.

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