Cenvat credit on cess components paid by a 100% EOU justified waiver of pre-deposit and stay of recovery.

Cenvat credit on Education Cess and Secondary and Higher Education Cess paid as part of CVD by a 100% EOU remained the disputed issue, and the Tribunal treated the case as identical to an earlier stay matter. It noted that the same credit question had already been stayed for a prior period and that insertion of the proviso in Rule 3(7) of the Cenvat Credit Rules did not alter the formula for discharge of CVD under the Rules. On that basis, the appellant was found to have a prima facie case for waiver of pre-deposit, and recovery of the confirmed duty, interest and penalty was 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 of the confirmed duty, interest and penalty arising from availment of Cenvat credit of Education Cess and Secondary and Higher Education Cess paid by a 100% EOU.

Analysis: The amounts in dispute arose from credit taken of CVD components, including Education Cess and Secondary and Higher Education Cess, paid by the EOU on clearance of goods to the appellant. The coordinate Bench had already granted stay in an identical matter, including for the prior period, and the same issue was found to arise here. The Tribunal also noted that, even after insertion of the proviso in Rule 3(7) of the Cenvat Credit Rules, the formula for discharge of CVD under the Rules remained the same.

Conclusion: The appellant made out a prima facie case for waiver of pre-deposit, and recovery of the amounts involved was stayed till disposal of the appeal.

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