Modvat credit and pre-deposit relief: prima facie entitlement and prior deposit justified stay of recovery pending appeal.

Waiver of pre-deposit and stay of recovery were considered in an appeal concerning Modvat credit under Rule 7(1)(b) of the Cenvat Credit Rules, 2002. The appellants had already deposited the disputed amount through their Mysore unit, and the Bangalore unit's credit claim arose from supplementary invoices on transfer of goods. On a prima facie view, the arrangement was not hit by Rule 7(1)(b), and the existing deposit supported relief. Further pre-deposit was therefore dispensed with and recovery was stayed pending disposal of the appeals.

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Issues: Whether waiver of pre-deposit and stay of recovery of the disputed duty amount was warranted pending disposal of the appeals in the context of entitlement to Modvat credit under Rule 7(1)(b) of the Cenvat Credit Rules, 2002.

Analysis: The appellants had already deposited the amount involved through their Mysore unit, and the credit taken by the Bangalore unit was based on supplementary invoices raised on unit transfer of goods. On a prima facie consideration, the transaction appeared not to be hit by Rule 7(1)(b) of the Cenvat Credit Rules, 2002. In view of the prima facie legal entitlement and the deposit already made, the requirement of further pre-deposit was dispensed with and recovery was stayed pending final hearing.

Conclusion: Waiver of pre-deposit was granted and recovery of the disputed amount was stayed till disposal of the appeals.

Ratio Decidendi: Where the appellant shows a prima facie case and the disputed amount has already been deposited by the supplier unit, pre-deposit of the same amount may be waived and recovery stayed pending appeal.

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