Prima facie duty-paid presumption for open-market scrap justified waiver of pre-deposit and stay of recovery in Modvat credit dispute.

Open-market purchase of aluminium scrap was treated as giving rise to a prima facie presumption that the inputs were duty paid for purposes of interim relief in a deemed Modvat credit dispute. The Revenue had not displaced that presumption at the stage of stay, and earlier Tribunal orders in comparable market-scrap matters were followed. On that basis, waiver of pre-deposit of duty and penalty was granted and recovery was stayed pending the appeals.

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Issues: Whether, in the facts and circumstances, the applicants were entitled to waiver of pre-deposit of duty and penalty and stay of recovery in a case concerning deemed Modvat credit on aluminium scrap purchased from the open market.

Analysis: The majority view proceeded on the admitted position that the inputs were purchased from the open market and applied the settled prima facie presumption that such goods are duty paid unless shown otherwise. The reasoning treated the Revenue as not having displaced that presumption for the purpose of interim relief and followed earlier Tribunal orders granting similar relief in comparable market-scrap cases.

Conclusion: The applicants were entitled to waiver of pre-deposit of duty and penalty and recovery was stayed pending the appeals.

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