Modvat credit reversal on duty-paid clearance supported waiver of pre-deposit and stay of recovery pending appeal.

CESTAT held that, for waiver of pre-deposit and stay of recovery pending appeal, the applicants had made out a strong prima facie case because duty paid on clearance of pipes and tubes after processing could be treated as reversal of Modvat credit. The Revenue's objection that the processing did not amount to manufacture was noted, but the Tribunal granted stay of recovery of the entire confirmed demand during pendency of the appeal.

---

---

Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery pending appeal on the ground that the duty paid on cleared goods could be treated as reversal of Modvat credit.

Analysis: The order records that the applicants had cleared the pipes and tubes on payment of duty after carrying out certain processes, and the Revenue had disputed availability of Modvat credit on the footing that those processes did not amount to manufacture. The Tribunal found a strong prima facie case in favour of the applicants because the duty paid on clearance could be treated as reversal of the credit availed.

Outcome: Recovery of the entire amount confirmed against the applicants was stayed during the pendency of the appeal.

---