Cenvat credit on duty-paid supplies against invalidated advance licences supported prima facie waiver of pre-deposit and recovery stay.

Cenvat credit on duty-paid raw materials supplied against invalidated advance licences was treated as supportable on a prima facie basis where an earlier Tribunal decision had already favoured the assessee. The Tribunal noted that the relevant notification and rules did not require clearance only without payment of duty, and that the revenue-neutral position remained because duty had been paid by the supplier and credit taken by the recipient. The DGFT policy circular relied on by the revenue was held not to govern this specific credit issue, so it did not override the earlier Tribunal view. On that basis, unconditional waiver of pre-deposit and stay of recovery was granted pending the appeals.

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Issues: Whether the appellants made out a prima facie case for unconditional waiver of pre-deposit and stay of recovery in view of the earlier Tribunal decision and the DGFT policy circular.

Analysis: The dispute concerned cenvat credit taken on duty-paid raw materials supplied against invalidated advance licences. The Tribunal noted that the same issue had already been decided in favour of the assessee in an earlier matter, where it was held that the relevant notification and connected rules did not require the goods to be cleared necessarily without payment of duty only. It further found that the revenue-neutrality aspect remained intact, since the supplier had paid duty and the recipient had taken credit of that duty. The policy circular relied upon by the adjudicating authority was held not to govern the specific question of availment of credit on duty-paid supplies, and therefore did not displace the earlier Tribunal view.

Conclusion: The appellants were held to have established a prima facie case for unconditional waiver of pre-deposit and stay of recovery during the pendency of the appeals.

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