Prima facie waiver of pre-deposit in Modvat credit dispute was granted only conditionally, with limited stay relief.

Waiver of pre-deposit and stay of recovery pending appeal were considered on a prima facie assessment of a Modvat credit dispute relating to broken bottles under Rule 57D. The claimed breakage rate of 65% to 70% was viewed as unusually high, and the contention that poor bottle quality brought the loss within Rule 57D was not found sufficiently persuasive at the interim stage. Complete waiver of pre-deposit was therefore declined, but further deposit was directed only as a condition for stay. The balance duty and the entire penalty were waived, and recovery of those amounts was stayed pending final disposal of the appeal.

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Issues: Whether the appellant was entitled to complete waiver of pre-deposit and stay of recovery pending appeal in respect of the duty and penalty demand arising from disallowance of Modvat credit on broken bottles under Rule 57D.

Analysis: The claim for waiver was examined on a prima facie basis. The breakage of bottles was stated to be as high as 65% to 70%, which was considered to be on the higher side in normal circumstances. The contention that the bottles were of poor quality and that the breakage should be covered by Rule 57D was not found, at this stage, to be sufficiently persuasive in the appellant's favour. At the same time, the issue was left open for final determination at the hearing of the appeal.

Conclusion: Complete waiver of pre-deposit was declined, and a further amount was directed to be deposited as a condition for grant of stay. The balance duty and the entire penalty were waived and recovery of the same was stayed pending disposal of the appeal.

Final Conclusion: Interim relief was granted only to a limited extent, subject to further deposit, and the appeal remained pending for final adjudication.

Ratio Decidendi: Waiver of pre-deposit and stay pending appeal depend on a prima facie assessment of the disputed demand and the surrounding facts, and may be granted conditionally where complete waiver is not justified.

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