Pre-deposit relief in central excise classification dispute granted where disputed facts and law justified stay pending appeal.

Pre-deposit of disputed central excise duty and penalty was dispensed with, and recovery was stayed during the pendency of the appeal, because the classification dispute over inputs as bars or flats remained contentious and was already pending before the Supreme Court. The Tribunal noted that the adjudication rested on disputed factual and legal foundations, and that the matter was not suitable for final resolution at the stay stage. Finding that insistence on pre-deposit would cause undue hardship, it granted stay in favour of the assessee pending appeal.

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Issues: Whether pre-deposit of the disputed central excise duty and penalty should be dispensed with and recovery stayed during the pendency of the appeal.

Analysis: The dispute arose in the context of classification of the inputs as bars or flats and the consequential effect on duty and Modvat credit. The matter was already contentious, the earlier classification issue was pending before the Supreme Court, and the adjudication had itself proceeded on a disputed factual and legal basis. At the stay stage, the Tribunal found that compelling pre-deposit would cause undue hardship, and that the issue was not fit for final determination in the stay proceedings.

Conclusion: The requirement of pre-deposit was dispensed with and recovery of the duty and penalty was stayed during pendency of the appeal, in favour of the assessee.

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