Pre-deposit cannot be insisted on where Modvat credit claim is prima facie covered and the notice-based record is ignored.

Modvat credit on duty paid by job workers for returned pipes sent for re-drawing was held to be prima facie covered by an earlier citation. The original authority failed to deal with that precedent, while the appellate authority relied on irrelevant inferences and matters not contained in the show-cause notice. On that basis, the direction to make a pre-deposit was not supported by proper material, and dismissal of the appeal for non-compliance was unsustainable. The matter was remanded to the Commissioner (Appeals) for fresh decision without insisting on pre-deposit.

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Issues: Whether the insistence on pre-deposit and the consequential dismissal of the appeal were justified when the assessee's claim was prima facie covered by an earlier citation and the authorities relied on extraneous considerations.

Analysis: The dispute concerned availment of Modvat credit on duty paid by job workers on returned pipes sent for re-drawing. The earlier citation directly covered the controversy, but the original authority did not deal with it and the appellate authority introduced irrelevant inferences and matters not found in the show-cause notice. The order directing pre-deposit was therefore not based on the proper material, and the subsequent dismissal for non-compliance with that direction was unsustainable.

Conclusion: The insistence on pre-deposit was unjustified and the matter had to be remanded to the Commissioner (Appeals) for fresh decision without insisting on pre-deposit.

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