Pre-deposit waiver and Modvat credit scrutiny led to recall of an ex parte stay order and only partial interim relief.

An ex parte stay order passed without hearing the appellants was recalled after the application showed the order had been made without consideration of the merits. On the request for waiver of pre-deposit, the claim to Modvat credit by job workers, supported by invoices in the supplier's name and Board circulars, required closer factual scrutiny; no sufficient prima facie case was shown to justify full waiver. Partial interim protection was granted instead, subject to a pre-deposit of Rs. 5 lakhs, with the balance demand stayed on compliance.

---

---

Issues: (i) whether the ex parte stay order deserved to be recalled; and (ii) whether full waiver of pre-deposit of the duty demand was warranted.

Issue (i): whether the ex parte stay order deserved to be recalled.

Analysis: The stay order had been passed without hearing the appellants because their counsel could not appear. On consideration of the recall application and the circumstances explained therein, the order was treated as one passed without consideration of the merits.

Conclusion: The ex parte stay order was recalled and the miscellaneous application was allowed.

Issue (ii): whether full waiver of pre-deposit of the duty demand was warranted.

Analysis: The claim to Modvat credit by job workers, based on invoices issued in the name of the supplier and the cited Board circulars, required closer scrutiny on the facts. The appellate order had recorded detailed reasons for disallowing the credit, and no sufficient prima facie ground was found to disagree with that reasoning. At the same time, the circumstances justified partial protection against recovery pending appeal.

Conclusion: Full waiver was declined, but a partial waiver was granted on condition of pre-deposit of Rs. 5 lakhs, with the balance demand stayed on compliance.

Final Conclusion: The proceedings resulted in recall of the earlier ex parte stay order and grant of only partial interim relief, subject to compliance with the directed pre-deposit.

Ratio Decidendi: Where no strong prima facie case is made out for complete waiver, interim relief may be confined to partial pre-deposit protection pending appeal.

---