Mandatory vehicle accessories and Cenvat credit support waiver of pre-deposit and stay of recovery pending appeal.

Where saree guards were mandatorily fitted on two-wheelers under the Central Motor Vehicles Rules and duty had been paid on the vehicle value including those guards, a prima facie case existed for Cenvat credit on the guards. On that basis, the demand of credit, interest and penalty did not call for pre-deposit at the appeal stage, and recovery was stayed pending disposal of the appeal.

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Issues: Whether, for the purpose of hearing the appeal, the appellant was entitled to waiver of pre-deposit of the Cenvat credit demand, interest and penalty, and stay of recovery.

Analysis: The clearance of two-wheelers with saree guards fitted on them was required under the Central Motor Vehicles Rules. Duty had been paid on the value of the vehicles including the value of the saree guards. On these facts, a prima facie case was made out that the appellant was eligible for Cenvat credit in respect of the saree guards, and the demand, interest and penalty did not require pre-deposit at this stage.

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

Ratio Decidendi: Where an input or accessory is mandatorily fitted to the final product, duty is paid on the value including that component, and the appellant shows a prima facie case on credit eligibility, pre-deposit and recovery may be stayed pending appeal.

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