Prima facie case in CENVAT credit dispute justifies conditional stay on pre-deposit terms pending appeal.

In a CENVAT credit dispute over furniture, other goods claimed as inputs or capital goods, and certain input services, CESTAT Mumbai found the credit issue to be debatable and held that the appellant had shown a prima facie case on the service-credit nexus as well. On that basis, it granted conditional stay of the balance tax, interest and penalty pending disposal of the appeal, subject to pre-deposit of Rs. 40 lakhs with adjustment of any amount already paid. The order reflects that where the credit claim is arguable and a prima facie case is made out, stay can be granted on pre-deposit terms.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of the balance demand pending disposal of the appeal.

Analysis: The dispute related to CENVAT credit on furniture and other goods claimed as inputs or capital goods, and on input services said to have nexus with the output services. The Tribunal found that the credit issue regarding items such as sofa, almirah and similar goods was debatable, and that a prima facie case existed for the appellant on the other input services also.

Conclusion: The appellant was directed to pre-deposit Rs. 40 lakhs, with liberty to adjust any amount already paid, and upon compliance, stay of the balance tax, interest and penalty was granted till disposal of the appeal.

Ratio Decidendi: Where the credit dispute is debatable and a prima facie case exists, conditional stay may be granted on terms of pre-deposit.

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