Cenvat credit reversal and pre-deposit waiver turn on whether written-off inputs remained available in the factory.

Waiver of pre-deposit and stay of recovery were considered in a dispute over reversal of Cenvat credit on inputs alleged to have been written off or treated as non-moving items. The operative question was whether the goods, though written off in the books, remained available in the factory and whether credit had been properly reversed where goods were removed; an asserted overlap with an earlier show-cause notice could not be finally examined at the waiver stage. On a prima facie assessment of the evidence and rival contentions, partial relief was granted by directing a 25% deposit and staying recovery of the balance during the appeal.

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Issues: Whether waiver of pre-deposit and stay of recovery were warranted in respect of the demand for reversal of Cenvat credit on inputs alleged to have been written off or treated as non-moving items.

Analysis: The demand depended on whether the inputs, though written off in the books, were still available in the factory and whether the credit had been correctly reversed wherever the goods were removed. The dispute also involved an asserted overlap with an earlier show-cause notice, but that aspect could not be conclusively examined at the stage of waiver. The matter turned on appreciation of evidence and a prima facie assessment of the rival contentions.

Conclusion: Partial waiver of pre-deposit was granted by directing deposit of 25% of Rs. 10 lakhs, with the balance waived and recovery stayed during the pendency of the appeal.

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