CENVAT credit on re-imported rejected goods may be prima facie eligible, but complete waiver of pre-deposit was denied.

CENVAT credit on re-imported rejected goods was considered prima facie eligible where duty had been paid on removal and the goods were brought back under Rule 16 of the Central Excise Rules, 2002 for re-making, refining, re-conditioning or other reasons. Even so, the applicant did not establish a case for complete waiver of pre-deposit in the stay proceedings. Balancing revenue interests with stay principles, only partial relief was granted and the appellant was directed to deposit 50% of the disputed credit, with the balance stayed pending appeal.

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Issues: Whether, in an application for waiver of pre-deposit, the appellant had made out a prima facie case for complete waiver of the demand in relation to CENVAT credit availed on re-imported rejected goods under Rule 16 of the Central Excise Rules, 2002.

Analysis: The appellant had received back rejected exported goods, paid CVD on re-importation, and availed CENVAT credit of that duty. The provision relied upon applies where goods on which duty had been paid at the time of removal are brought back to the factory for re-making, refining, re-conditioning or any other reason. On a prima facie reading, such goods would be eligible for credit under the rule. Even so, the appellant was not found to have established a case for total waiver of the dues adjudged. Balancing the interest of revenue and the settled principles governing stay applications, the requirement was restricted to a partial deposit.

Conclusion: The appellant was granted only partial relief and was directed to deposit 50% of the disputed CENVAT credit amount, with the balance stayed during pendency of the appeal.

Ratio Decidendi: In a stay application, where the governing rule prima facie supports eligibility of credit but the applicant fails to establish entitlement to complete waiver, the tribunal may order partial pre-deposit and stay the balance.

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