Modvat credit on fuel used for steam generation in manufacture supported waiver of pre-deposit and stay of recovery.

Modvat credit on fuels used to generate steam for hydraulic presses in job-work manufacture was treated as supportable on a prima facie basis. The applicable rule was read as allowing credit on inputs used directly or indirectly in or in relation to manufacture, including goods used for generation of steam within the factory. Earlier Tribunal authority on fuel used in job-work production was considered comparable, and the assessee's case was found strong enough to justify waiver of pre-deposit and stay of recovery.

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Issues: Whether the assessee had made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to denial of Modvat credit on fuels used for generation of steam, which was used in the manufacture of final products on job work basis.

Analysis: The fuels were used for generation of steam, which in turn operated hydraulic presses directly involved in manufacture. The applicable rule permitted credit on specified inputs used directly or indirectly in or in relation to manufacture, including goods used for generation of electricity or steam within the factory. The facts were found comparable to earlier Tribunal authority allowing credit on fuel used in job work manufacture, and the appellant's case was treated as strong on a prima facie basis.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery.

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