Always down, to protect from the heat source.
Might not mean chit above the water pan, but at the upper level, cap down, per Jim Minion, and the fat renders out, protecting the meat
"...Best Buy sucks. They suck it long, and they suck it hard." - JazzyBadger
Bandera, M-BGE, WSM, Gold Kettle, Kenmore Gasser, 36Qt Turkey Fryer, ECB, Dutch Oven