Cenvat credit on rails dispute led to partial pre-deposit, with balance demand and penalty stayed on compliance.

The dispute concerned eligibility of Cenvat credit on rails under the Cenvat Credit Rules, 2004, after the appellant had first treated the rails as capital goods and later claimed them as inputs. The Tribunal considered that similar facts in an earlier matter had led to a partial pre-deposit direction, and applied that parity while dealing with the request for waiver of pre-deposit of disputed credit and penalty. Complete waiver was declined. The appellant was directed to deposit 25% of the disputed Cenvat credit, and compliance would secure waiver and stay of the balance demand and penalty during pendency of the appeal.

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Issues: Whether, in the facts of the case, the appellant was entitled to complete waiver of pre-deposit of the disputed Cenvat credit and penalty, or only a partial waiver on deposit of a specified percentage.

Analysis: The appellant had availed Cenvat credit on rails, initially treating them as capital goods and later claiming them as inputs. The dispute centred on the eligibility of the rails for credit under the Cenvat Credit Rules, 2004, and the Tribunal noted that in an earlier matter involving similar facts it had directed a partial pre-deposit. Taking that parity into account, the Tribunal fixed a pre-deposit at 25% of the disputed credit and directed that compliance would operate as waiver and stay for the balance during pendency of the appeal.

Conclusion: Complete waiver was declined. The appellant was directed to deposit 25% of the disputed Cenvat credit, and the remaining demand and penalty were stayed on compliance.

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