Cenvat credit on capital goods for exempted goods denied as prima facie case and hardship were not shown.

Cenvat credit on capital goods used exclusively for exempted goods was barred under Rule 6(4) of the Cenvat Credit Rules, 2004, because eligibility is tested when the capital goods are received and by reference to the dutiability of the final product at that time. The plea that the goods would later be used for dutiable manufacture after the exemption period did not establish a prima facie case for waiver of pre-deposit. The record also indicated incomplete disclosure to the Department during the relevant period, supporting extended limitation, and no material was produced to show financial hardship. Stay of recovery for duty and interest was refused, while recovery of penalty was stayed pending appeal.

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Issues: Whether the appellant had made out a prima facie case and financial hardship for waiver of pre-deposit and stay of recovery in a dispute concerning availment of Cenvat credit on capital goods used for exempted goods.

Analysis: Credit on capital goods used exclusively in the manufacture of exempted goods is barred by Rule 6(4) of the Cenvat Credit Rules, 2004. The appellant's plea that the capital goods would later be used for dutiable production after the exemption period was held not to assist it, because credit eligibility is determined with reference to the dutiability of the final product when the capital goods are received. The record also showed that the Department was not fully informed of the credit availment during the relevant period, which supported invocation of the extended period. No supporting material was produced to substantiate financial hardship.

Conclusion: No prima facie case was made out for waiver of the pre-deposit of the duty-related amount and interest, and the stay application failed. Limited relief was granted only by staying recovery of the penalty amount till disposal of the appeal.

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