Cenvat credit dispute: conditional stay and waiver of pre-deposit granted subject to deposit of most of the demand.

A dispute over alleged irregular availment of Cenvat credit on input services for taxable and exempted output services turned on the absence of separate accounts and the applicability of Rule 6(3) of the Cenvat Credit Rules, 2004, alongside recovery under Rule 14 read with Section 75 of the Finance Act. In the pending appeal, interim protection against recovery was not granted unconditionally; waiver of pre-deposit and stay of further proceedings were made subject to deposit of 80% of the Cenvat credit amount ordered to be recovered, together with corresponding interest.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery proceedings in respect of the disputed Cenvat credit demand.

Analysis: The dispute arose from the alleged irregular availment of Cenvat credit on input services used for output services where separate accounts were not maintained for taxable and exempted output services. The appellant relied on Rule 6(3) of the Cenvat Credit Rules, 2004, while the recovery had been confirmed under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act and penalties had also been imposed. In the pending appeal, the Tribunal granted interim protection, but only on a conditional deposit of a substantial part of the amount demanded.

Conclusion: Waiver of pre-deposit and stay of further proceedings were granted conditionally, subject to deposit of 80% of the Cenvat credit amount ordered to be recovered along with corresponding interest.

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