Prima facie case on transfer of capital goods to own units supported waiver of pre-deposit at stay stage.

Capital goods transferred on payment of duty to another unit of the same manufacturer were treated as raising a debatable entitlement to credit, and the Tribunal held that the issue required final determination. For the limited purpose of stay, the appellants established a prima facie case because the goods were removed only to their own units and the balance credit was taken in the next financial year. On that basis, waiver of pre-deposit of duty and penalty was granted at the interim stage, without deciding the merits of the credit dispute.

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Issues: Whether, for the purpose of stay, the appellants made out a prima facie case for waiver of pre-deposit of duty and penalty where the capital goods were transferred to their own units and the remaining credit was taken in the next financial year.

Analysis: The issue turned on whether capital goods transferred on payment of duty to another unit of the same manufacturer could still be regarded as being in the possession and use of the manufacturer, and whether denial of the balance credit was warranted at the stay stage. The material placed before the Tribunal showed that the goods were removed only to the appellants' own units on payment of full duty, and the question whether such transfer affected entitlement to credit was left for final hearing. For the limited purpose of the stay application, the Tribunal found that the appellants had established a prima facie case.

Conclusion: Waiver of pre-deposit of duty and penalty was granted in favour of the appellants.

Ratio Decidendi: Where the capital goods are transferred to another unit of the same manufacturer on payment of duty, and the issue requires final determination, a prima facie case may justify waiver of pre-deposit at the interim stage.

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