Bangalore unit granted stay, waived pre-deposit pending appeal. Hearing set for May 10th.

The Tribunal allowed the stay application of the Bangalore unit, waiving the pre-deposit of the disputed amount and staying its recovery until the appeals were resolved. The appeals were scheduled for a hearing on 10th May 2005, with para-wise comments to be gathered by the DR.

---

---

Issues:
1. Entitlement to Modvat credit under Rule 7(1)(b) of the Cenvat Credit Rules, 2002.

Analysis:
The case involved a dispute regarding the entitlement to Modvat credit under Rule 7(1)(b) of the Cenvat Credit Rules, 2002. The appellants had taken Modvat credit in respect of supplementary invoices issued by their Mysore unit. A Show Cause Notice was issued to the Mysore unit demanding the same amount, alleging suppression of facts. The appellants argued that since their Mysore unit had already deposited the differential duty, their Bangalore unit was entitled to take Modvat credit based on the supplementary invoices. The Commissioner contended that as the Mysore unit had suppressed facts, the appellants were not entitled to the credit under Rule 7(1)(b).

The appellants argued that Rule 7(1)(b) allows denial of Modvat credit only when goods are sold by the manufacturer. In this case, there was a unit transfer of goods with a notional amount shown in the supplementary invoices, not a sale. Therefore, they believed they were not impacted by Rule 7(1)(b). On the other hand, the JDR defended the impugned order, claiming there was a sale of goods, making the appellants ineligible for Modvat credit under Rule 7(1)(b).

After considering the submissions, the Tribunal noted the crucial question of whether the transaction fell within the scope of Rule 7(1)(b). A detailed hearing was deemed necessary to determine if the appellants were affected by the rule. However, prima facie examination supported the appellants' arguments, especially since the amount had already been paid by the Mysore unit. Consequently, the Tribunal allowed the stay application of the Bangalore unit, waiving the pre-deposit of the disputed amount and staying its recovery until the appeals were resolved. The request for an early hearing was granted, scheduling both appeals for a hearing on 10th May 2005. The DR was instructed to gather para-wise comments on the matter.

---