Cenvat credit on testing equipment can qualify as input when it is essential to manufacture-related tyre testing.

Ring Rim used for inflated dimension testing of tyres was treated as having a prima facie nexus with manufacture because the testing could not be carried out without it and the input definition extends to indirect as well as direct use in or in relation to manufacture. On that basis, the appellant established a prima facie case for Cenvat credit eligibility, and waiver of pre-deposit with stay of recovery was granted during the pendency of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of Cenvat credit on Ring Rim used for tyre testing.

Analysis: Ring Rim was found to be an essential item for inflated dimension testing of tyres before clearance, and without its use the testing could not be carried out. On a prima facie view, such use brought the item within the expression used in or in relation to manufacture under the definition of input, which has a wide scope and covers indirect as well as direct use. The item was therefore treated as having a prima facie nexus with manufacture of the final product.

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

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