Cenvat credit on inputs for capital goods supported pre-deposit waiver where depreciation related only to the finished capital goods.

Cenvat credit on inputs used to manufacture capital goods was treated as prima facie sustainable, because the alleged double benefit arose from depreciation claimed on the capital goods themselves, not on the inputs. The show-cause notice did not allege that credit on those inputs was inadmissible. On that basis, the demand was regarded as prima facie unsustainable and pre-deposit was waived pending disposal of the appeal.

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Issues: Whether pre-deposit was required in an appeal involving Cenvat credit taken on inputs used in the manufacture of capital goods, where depreciation had also been availed under income-tax law on the capital goods manufactured within the factory.

Analysis: The demand was found, prima facie, to be unsustainable because the alleged double benefit related to capital goods, whereas the credit in question had been taken only on inputs used for manufacture of those capital goods. The show-cause notice did not allege that credit on such inputs was inadmissible.

Outcome: Requirement of pre-deposit was waived during pendency of the appeal.

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