Pre-deposit waiver for excise appeal where prima facie non-liability and Modvat credit reversal justified hearing on merits.

Pre-deposit of duty and penalty was waived where the appellants showed a strong prima facie case that duty was not payable on supplies made to the Department of Atomic Energy and that the credit had been taken back on their own. The discussion distinguished refund claims, which require compliance with the prescribed procedure, from reversal of Modvat credit, and treated the materials on record as sufficient cause to dispense with deposit. The appeal was therefore remitted for decision on merits without insisting on pre-deposit.

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Issues: Whether pre-deposit of duty and penalty was required before hearing the appeal, and whether the appeal could be heard on merits without insisting on such deposit.

Analysis: The appeal arose from dismissal for non-compliance with the pre-deposit requirement. The appellants had made a strong prima facie case that duty was not payable on supplies made to the Department of Atomic Energy and that credit had been taken back on their own. The distinction between refund, which requires compliance with the prescribed procedure, and taking Modvat credit was recognised, and the materials disclosed sufficient cause to dispense with pre-deposit.

Outcome: The requirement of pre-deposit was waived and the matter was sent back for decision of the appeal on merits without insisting upon deposit of duty and penalty.

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