Modvat credit on plant items justified interim stay after Larger Bench recognised credit on similar goods.

Modvat credit on blower/electric fan, LPG storage tank and oven was supported by a subsequent Larger Bench ruling that rejected the earlier decisions relied on for disallowance and recognised credit on similar items, giving the appellant a strong prima facie case. On that basis, interim protection was justified and the impugned order was stayed absolutely until final disposal of the appeal, with the Revenue restrained from coercive recovery.

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Issues: Whether interim protection should be granted against recovery of duty arising from disallowance of Modvat credit on blower/electric fan, LPG storage tank and oven.

Analysis: The impugned disallowance was founded on earlier Tribunal decisions. A Larger Bench had since held those decisions not to lay down the correct proposition of law and had recognised the permissibility of Modvat credit on similar items, giving the appellant a strong prima facie case.

Outcome: Absolute stay of the impugned order was granted till final disposal of the appeal, and the Revenue was restrained from taking coercive recovery action pending disposal.

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