Modvat credit prima facie case justified waiver of pre-deposit and stay of recovery pending appeal.

At the stay stage, the Tribunal held that where duty had been paid on a fabricated sulphur melter with coils and the item was used in the factory for manufacture of final products, a prima facie case could be made for Modvat credit under Rule 57Q of the Central Excise Rules, 1944. On that limited assessment, the Tribunal found no sufficient basis for immediate recovery and waived pre-deposit of the duty and penalty, staying recovery until disposal of the appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery of the duty and penalty demanded in respect of the fabricated Sulphur Melter with Coils.

Analysis: The Tribunal noted that duty had been paid on the item and that it was used in the factory for manufacture of final products. On the material before it, the Tribunal found a prima facie case that the item satisfied the requirements relevant to Modvat credit under Rule 57Q of the Central Excise Rules, 1944, and did not find force in the Revenue's contention for immediate recovery. Since the issue was at the stay stage, the Tribunal confined itself to a prima facie assessment.

Conclusion: The requirement of pre-deposit of the duty and penalty was waived and recovery was stayed till disposal of the appeal, in favour of the appellants.

Ratio Decidendi: At the stay stage, where the assessee shows a prima facie case that duty paid goods were used in manufacture and satisfy the conditions for Modvat credit, pre-deposit may be waived and recovery stayed pending disposal of the appeal.

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