CENVAT credit on structural support items: no prima facie case for full waiver of pre-deposit

Structural items used only to fabricate support for machinery were treated as neither components, spares nor accessories of capital goods, so no prima facie case for complete waiver of pre-deposit arose. An earlier Supreme Court ruling on supporting structures was considered prima facie applicable to the capital goods definition under the CENVAT Credit Rules, and the interim relief was therefore limited. The amount already deposited and the appellant's further offer were accepted for the stay arrangement, but full waiver was refused. Waiver and stay were granted only subject to compliance with the additional pre-deposit for the penalty and the balance demand.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay in respect of the demand arising from denial of CENVAT credit on structural items used to fabricate support for machinery.

Analysis: The structural items were admittedly used only for fabricating structural support to machinery and were not shown to be components, spares or accessories of capital goods. The earlier Supreme Court ruling on supporting structures, though rendered under clause (5) of Rule 57Q(1) of the Central Excise Rules, 1944, was treated as prima facie applicable to clause (iii) of the definition of capital goods under Rule 2(a)(A) of the CENVAT Credit Rules, 2004. On that basis, no prima facie case for complete waiver was made out. However, the amount already deposited and the further offer made by the appellant were accepted for the interim arrangement.

Conclusion: The request for full waiver was rejected, and the appellant was directed to make a further pre-deposit of Rs. 2 lakhs, with waiver and stay granted subject to compliance in respect of the penalty and the balance demand.

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