CENVAT credit utilisation supported waiver of pre-deposit, allowing remand for decision on merits.

CENVAT credit lawfully availed on duty-paid inputs was used to pay duty on clearance of duty-free inputs into the domestic tariff area, and the credit itself was not disputed. Because CENVAT utilisation does not require strict one-to-one correlation between credit earned and credit used, that utilisation was treated as sufficient to justify dispensation of the pre-deposit requirement at the interim stage. The matter was remanded to the Commissioner (Appeals) for decision on merits without insisting on pre-deposit.

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Issues: Whether the appellant was entitled to dispensation of the pre-deposit condition and remand of the matter for decision on merits.

Analysis: The appeal arose from dismissal for non-compliance with the stay order requiring deposit of duty. The appellant had utilised CENVAT credit, already lawfully availed on duty-paid inputs, for payment of duty on clearance of duty-free inputs into the domestic tariff area. The credit was not disputed, and in CENVAT matters there is no strict one-to-one correlation between credit earned and its utilisation. On that basis, the use of such credit for the impugned clearance was treated as sufficient to justify waiver of the pre-deposit requirement at this stage.

Conclusion: The pre-deposit condition was dispensed with and the matter was remanded to the Commissioner (Appeals) for decision on merits without insisting on pre-deposit.

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