Pre-deposit waiver in CENVAT dispute limited where materials were prima facie used for construction purposes.

Prima facie use of CENVAT credit-availing MS items for construction purposes justified denial of complete waiver of pre-deposit at the interim stage. The remaining dispute, concerning use of other materials in plant components such as storage tanks, boilers, chimneys and pollution control equipment, was left for consideration at the appeal hearing. Conditional relief was therefore granted: the applicant was directed to deposit Rs. 20,00,000, after which the balance pre-deposit was waived and recovery of the remaining dues stayed during the pendency of the appeal.

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Issues: Whether the applicant was entitled to complete waiver of pre-deposit and stay of recovery pending appeal.

Analysis: The materials on record showed that a portion of the MS items on which CENVAT credit had been taken was used for construction purposes, which did not justify full waiver at the interim stage. At the same time, the dispute regarding the use of the remaining materials in plant components such as storage tanks, boiler, chimney and pollution control equipment required consideration at the appeal hearing.

Conclusion: The applicant was directed to deposit Rs. 20,00,000, and upon such deposit the balance pre-deposit stood waived and recovery of the balance dues was stayed during the pendency of the appeal.

Final Conclusion: Interim relief was granted only in part, with conditional waiver of the remaining pre-deposit after a further deposit and protection against recovery of the balance during appeal.

Ratio Decidendi: Where the record shows prima facie use of credit-availing materials for construction purposes, complete waiver of pre-deposit is not warranted, though conditional waiver and stay may be granted pending appeal.

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