Modvat credit on intermediate parts supported waiver of pre-deposit and stay of recovery pending appeal.

A stay application on disputed Modvat credit for fuel tanks and struts found a strong prima facie case for waiver of pre-deposit. The Tribunal accepted, prima facie, that the parts were intermediate goods used in manufacturing motor vehicles and returned for further use in duty-paid final products. It also held, prima facie, that failure to obtain separate permission under Rule 57F(2) did not by itself defeat the Modvat claim, especially where prior permission and procedural compliance were shown on record. Pre-deposit was dispensed with and recovery stayed pending appeal.

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Issues: Whether the applicants made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the disputed Modvat credit on fuel tanks and struts.

Analysis: The Tribunal found prima facie force in the contention that fuel tanks and struts were intermediate parts used in the manufacture of motor vehicles and that the goods were returned for further use in the manufacture of duty-paid final products. It also accepted, prima facie, that non-obtaining of separate permission under Rule 57F(2) could not by itself defeat the Modvat claim, and that the permission already granted in July 1987, along with the procedural compliance shown on record, supported the applicants' case.

Conclusion: The applicants were held to have made out a strong prima facie case, and the pre-deposit of duty was dispensed with with stay of recovery pending appeal.

Final Conclusion: Interim relief was granted in favour of the applicants, while the appeals were kept for hearing on the merits.

Ratio Decidendi: In a stay application, where the record shows a strong prima facie case on eligibility to Modvat credit and procedural compliance, pre-deposit may be waived and recovery stayed pending appeal.

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