Prima facie case in Modvat credit disputes can justify stay of recovery pending appeal and prompt appellate disposal.

In proceedings under Article 226, recovery for alleged wrong availment of Modvat credit may be stayed pending disposal of the statutory appeal where the materials disclose a prima facie case for interim protection. Prior orders and related records indicated that the disputed inputs had been treated as eligible in similar matters, and the alleged defects in declaration were explained. On that basis, the court found no clear absence of a prima facie case at the interlocutory stage and granted protection by staying recovery until the appeal was decided, while directing expeditious disposal of the appeal.

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Issues: Whether, in proceedings under Article 226 of the Constitution of India, recovery proceedings for alleged wrong availment of Modvat credit should be stayed pending disposal of the statutory appeal, and whether the petitioner had made out a prima facie case for interim protection.

Analysis: The petition challenged refusal of stay by the appellate authority during pendency of the appeal. The record disclosed prior orders and materials indicating that the disputed items had been treated as eligible inputs in similar matters, and the alleged procedural defects in declaration were explained. On these materials, it could not be said at the interlocutory stage that the petitioner lacked a prima facie case, which was treated as the dominant consideration for interim relief.

Outcome: Recovery proceedings were stayed until disposal of the pending appeal, and the appellate authority was directed to decide the appeal within three months.

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