Prima facie case for Modvat credit dispute justified waiver of pre-deposit and stay of recovery pending appeal.

Modvat credit on glass beads used in manufacturing audio-magnetic tapes was examined only for stay purposes, and the relevant question was whether a prima facie case had been made out for waiver of pre-deposit and stay of recovery. The materials relied on supported earlier decisions that an item used in a machine is not automatically a part of that machine, and the exclusion of machine parts under Rule 57A was also pending before a Larger Bench. On that basis, a prima facie case was found to exist, and waiver of pre-deposit with stay of recovery was granted pending disposal of the appeal.

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

Analysis: The dispute concerned denial of Modvat credit on glass beads used in the manufacture of audio-magnetic tapes. For the limited purpose of stay, the relevant consideration was only whether a prima facie case existed. The materials relied upon showed support from earlier decisions that an item used in a machine is not necessarily a part of that machine, and the issue whether machine parts were excluded under Rule 57A was also pending before a Larger Bench. In these circumstances, the applicants were found to have established a prima facie case.

Conclusion: The applicants were entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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