Prima facie burden on original licencee for Modvat credit dispute led to waiver of pre-deposit in VBAL import case.

A prima facie case for waiver of pre-deposit was found in a dispute over duty-free imports under the VBAL Scheme and alleged simultaneous Modvat credit on inputs used for export goods. The Tribunal applied the principle from Goodluck Industries, as affirmed by the Supreme Court, that the burden of proving availment of Modvat credit on the relevant inputs rests on the original licencee, not the transferee. As the record showed no prima facie basis to support the allegation that the original importers had taken such credit, the duty and penalty deposit requirement was stayed pending appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit of duty and penalty in a dispute concerning duty-free import under the VBAL Scheme and alleged simultaneous availment of Modvat credit on inputs used in export goods.

Analysis: The Tribunal noted that the dispute arose from the alleged violation of Condition No. V(A) of Notification No. 203/92-Cus. dated 19-5-92. It relied on the earlier Tribunal decision in Goodluck Industries, as affirmed by the Supreme Court, that the burden of proving availment of Modvat credit on the relevant inputs lay on the original licencee and not on the transferee. The record also disclosed no prima facie basis for the allegation that the original importers had actually taken Modvat benefit on inputs imported under the VBAL scheme.

Conclusion: A strong prima facie case for waiver of pre-deposit was made out, and the requirement to deposit the duty and penalty was stayed pending the appeal.

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