Proportionate CENVAT credit for textile manufacturers supported interim relief where records backed month-end credit treatment.

Clarificatory circulars can support proportionate CENVAT credit for textile manufacturers using common inputs in continuous manufacture, where records support month-end credit for goods cleared on payment of duty. On the facts considered, the applicant established a strong prima facie case for interim relief, and the objection that the circular operated prospectively did not defeat waiver of pre-deposit. The result was waiver of pre-deposit and stay of recovery during pendency of the appeal.

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Issues: Whether the applicant had made out a prima facie case for waiver of pre-deposit and stay of recovery in a dispute concerning availing of proportionate CENVAT credit while clearing final products under Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E.

Analysis: The circular relied upon by the applicant was treated as clarificatory and as recognising the practical difficulty faced by textile manufacturers using common inputs in continuous manufacture. The circular permitted proportionate credit to be taken at the end of the month for goods cleared on payment of duty, subject to record support. On that basis, and in the absence of any dispute on quantum, the applicant was found to have a strong prima facie case. The objection that the circular was prospective did not displace the entitlement to interim relief in the facts considered.

Conclusion: The applicant was entitled to waiver of pre-deposit and stay of recovery during pendency of the appeal.

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