Pre-deposit waiver on prima facie exemption claim under Notification No. 175/86 despite Modvat credit issue

Waiver of pre-deposit pending appeal was granted on a prima facie showing that exemption under Notification No. 175/86 could still be available despite Modvat credit issues, where separate accounts were maintained. The Tribunal relied on a Board clarification that credit on inputs used for export production could not be denied merely because the assessee claimed full exemption for home clearances under the notification. On that basis, the appellant established a sufficient case for interim relief, and pre-deposit of duty was waived pending appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit pending appeal in the light of its claim to the benefit of Notification No. 175/86 despite having availed Modvat credit in respect of branded goods.

Analysis: The appellant claimed that it had not taken Modvat credit in respect of its own branded goods and that the denial of exemption was based on an incorrect understanding of the notification scheme. The record also disclosed a Board clarification stating that, where separate accounts are maintained, Modvat credit on inputs used for export production cannot be denied merely because the assessee avails full exemption for home clearances under Notification No. 175/86. The Tribunal treated this clarification as supporting the appellant's prima facie case.

Conclusion: The appellant was granted waiver of pre-deposit of duty pending appeal.

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