Cenvat credit on captive intermediate goods justified waiver of pre-deposit and stay of recovery pending appeal.

Cenvat credit on capital goods used to manufacture briquettes for captive consumption in soda ash production was treated as protectable pending appeal, because the briquettes were manufactured within the factory and used in the kiln as part of the assessee's own process. A Board circular supporting non-denial of credit where capital goods are used for intermediate goods captively consumed in making dutiable final products was relied on. On those facts, the appellant was found to have made out a prima facie case for waiver of pre-deposit, and recovery of the disputed demand was stayed until disposal of the appeal.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to denial of Cenvat credit on capital goods used for manufacture of briquettes employed in the production of soda ash.

Analysis: The briquettes were manufactured within the factory premises and were used in the kiln for production of the final product. The Board circular relied upon contemplated non-denial of Cenvat credit where capital goods are used for manufacturing intermediate goods that are captively consumed in the manufacture of dutiable final goods. On the facts noted by the first appellate authority, the briquettes were treated as manufactured and utilised in the assessee's own process, supporting the appellant's contention that the credit issue required protection pending appeal.

Conclusion: The appellant established a prima facie case for waiver of pre-deposit, and recovery of the disputed amount was stayed till disposal of the appeal.

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