Cenvat credit on alleged scrap failed prima facie scrutiny, with interim relief denied subject to pre-deposit.

Cenvat credit on rolled products, rejected pieces, CR sheets, wires and old parts described as scrap was scrutinised against the requirement of actual use as inputs. The record, including supplier statements and the nature of the goods, indicated that several items were finished or reusable products capable of use in other industries rather than waste or furnace scrap, and some credits had already been reversed. Indicators of paper entries further weakened the claim. On that material, the appellants failed to establish a prima facie entitlement to full waiver, and interim relief was declined subject to a directed pre-deposit.

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Issues: Whether the appellants had made out a prima facie case against the demand of Cenvat credit and were entitled to interim relief without substantial pre-deposit.

Analysis: The credit was claimed on rolled products, rejected pieces, CR sheets, wires and old parts described as scrap. The material on record, including supplier statements and the nature of the goods, indicated that many of these items were finished or reusable products capable of use in other industries and not waste or scrap for furnace consumption. The order also noted that some credits had already been reversed, that the transactions bore indicators of paper entries, and that the appellant had failed to establish actual use of the inputs as required under the Cenvat credit framework. On this material, the balance of convenience was held to lie with Revenue.

Conclusion: The appellants did not establish a prima facie entitlement to full waiver, and a pre-deposit of Rs. 40 lakhs was directed.

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