Proportionate Cenvat credit denial on common input services led to partial pre-deposit and stay of recovery pending appeal.

In a Cenvat credit dispute involving common input services used for taxable output services and trading activity, the Tribunal held that the denial of credit was confined to the proportion attributable to trading, which was not a taxable service during the relevant period. It found the cited High Court ruling inapplicable because the disallowance had already been made on a proportionate basis, and treated limitation as a mixed question of law and fact for final hearing. As no prima facie case for complete waiver was established, partial pre-deposit was directed, and recovery of the balance demand, interest, and penalty was stayed pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery in a dispute concerning Cenvat credit on common input services used for taxable output services and trading activity.

Analysis: The input services were used both for taxable output services and for trading activity, and the denial of credit in the impugned order was restricted only to the portion relatable to trading. Trading was not a taxable service during the relevant period, and the cited High Court order was found inapplicable on the facts because the present disallowance was already made on a proportionate basis. The plea of limitation was treated as a mixed question of law and fact to be examined at final hearing. On this basis, a prima facie case for complete waiver was not established.

Conclusion: The appellant was directed to deposit Rs. 2,50,000 within four weeks, and on such deposit, recovery of the balance demand, interest, and penalty would remain stayed pending disposal of the appeal.

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