Cenvat credit on job work processes: strong prima facie case led to waiver of pre-deposit.

In a dispute over disallowance of Cenvat credit arising from job-work processes, the Tribunal noted that the final products had suffered duty and that the relevant exemption notification did not require the principal manufacturer to perform the manufacturing operations itself. On that basis, the appellant established a strong prima facie case on credit eligibility and the department's allegation of suppression was not readily sustainable where duty payment on clearances was not in dispute. The balance of convenience was therefore found to favour the appellant, and pre-deposit was waived.

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Issues: Whether the appellant was entitled to waiver of pre-deposit in a dispute concerning disallowance of Cenvat credit and consequential recovery, penalty and interest.

Analysis: The appeal arose from a demand founded on the view that the processes undertaken through job work did not amount to manufacture and, therefore, the inputs did not qualify for credit. The material on record indicated that the appellant had paid duty on the final products and that the exemption notification applicable to job work did not require the principal manufacturer itself to carry out the manufacturing operations. The order also noted that the allegation of suppression was difficult to sustain in the circumstances, since the department's own case proceeded on the footing that duty had been paid on clearances of the final products.

Conclusion: The appellant had made out a strong prima facie case, and the balance of convenience was in its favour; pre-deposit was waived.

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