Modvat credit can be used for temporary pre-deposit adjustment where appeal rights remain protected.

A statutory pre-deposit requirement may be met by temporarily debiting available Modvat credit, where the adjustment remains subject to the outcome of the appeal and does not prejudice final rights. The tribunal treated the cash deposit obligation and the credit balance as distinct in form but read them with the Modvat scheme, reasoning that insisting on separate cash payment would amount to double payment while the credit remained in account. Temporary adjustment was therefore permitted only to the extent of available credit and only until the appeal was decided.

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Issues: Whether the amount required to be deposited under the pre-deposit provision could be temporarily adjusted by debiting the appellant's Modvat credit account.

Analysis: The deposit mandated by the statute and the credit available in the Modvat account were treated as distinct in form, but the statutory requirement had to be understood in the light of the Modvat scheme. The tribunal held that refusing temporary adjustment would effectively compel a double payment, since the credit continued to stand in the account while cash deposit would also be required. Since any adjustment during the pendency of the appeal would remain subject to the final outcome, permitting such temporary debit would not prejudice either side. The tribunal also noted its earlier practice of granting similar permission.

Conclusion: Temporary adjustment out of the Modvat credit account was permitted to the extent of the available credit, subject to the result of the appeal.

Final Conclusion: The appellant was granted interim relief allowing compliance with the deposit requirement through temporary Modvat adjustment rather than immediate cash payment.

Ratio Decidendi: A statutory pre-deposit requirement may be satisfied by temporary adjustment from available Modvat credit where the adjustment is subject to the appeal and does not prejudice the final rights of the parties.

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