Cenvat credit reversal reflected in returns supported prima facie waiver of recovery and stay against confirmed dues.

Periodic reversal of Cenvat credit relatable to exempted clearances, when reflected in ER-1 returns, was treated as a strong basis for waiver of recovery pending appeal. The record showed no clear allegation of short reversal in the show cause notices and no cogent support for the department's computation of alleged short payment. On that material, the demand was found prima facie unsustainable, and the time-bar plea was also supported because the relevant facts were disclosed in the returns. Complete waiver of recovery and stay against recovery of the confirmed dues were granted pending appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of recovery of the confirmed demand on the basis that the Cenvat credit attributable to exempted goods had been reversed and reflected in the returns, and whether the department had a basis for alleging short reversal and invoking limitation.

Analysis: The appellants had periodically reversed the credit relatable to the exempted clearances and those reversals were reflected in the ER-1 returns. The show cause notices did not contain a clear allegation of short reversal, and the record disclosed no cogent basis for the departmental computation of alleged short payment. On the material placed, the demand appeared prima facie unsupported, and the plea of time bar also found support because the relevant facts were disclosed in the returns.

Conclusion: The appellants were held entitled to complete waiver of recovery pending the appeal, and stay was granted against recovery of the confirmed dues.

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