Prima facie mismatch of penalty provision justified waiver of pre-deposit and stay of recovery in an excise MODVAT dispute.

Penalty under Rule 173Q for alleged excise irregularity was examined against a dispute arising from MODVAT credit taken on inputs under Rule 57I. On a prima facie assessment, the cited penalty clauses concerning removal of excisable goods did not squarely fit the notice, so the appellant established a strong case for interim protection. Waiver of pre-deposit and stay of recovery of the penalty were therefore granted pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the penalty imposed under Rule 173Q of the Central Excise Rules, 1944.

Analysis: The penalty had been imposed with reference to clauses (a) and (b) of Rule 173Q, which concern removal of excisable goods. The dispute, however, arose from MODVAT credit taken on inputs under Rule 57I. On a prima facie view, the cited penalty provision did not squarely cover the situation involved in the notice and the appellant therefore showed a strong case for interim protection.

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

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