Modvat credit on furnace transformers stayed as a debatable issue, with waiver of pre-deposit on bank guarantee security.

Denial of Modvat credit on transformers used in furnace melting was treated as a debatable issue under Rule 57Q, so the Tribunal required security for the revenue pending appeal. The appellants were directed to furnish a bank guarantee for the full duty amount within the time granted. On compliance, recovery was stayed and waiver of cash pre-deposit of the duty amount was granted.

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Issues: Whether the denial of Modvat credit on the transformer called for insistence on cash pre-deposit, and whether a bank guarantee could be accepted in place of the demanded amount pending appeal.

Analysis: The issue whether transformers used in the furnace for melting could fall within Rule 57Q was treated as debatable. To secure revenue pending hearing, the appellants were directed to furnish a bank guarantee for the entire duty amount within the time granted by the Tribunal.

Outcome: On compliance with the bank guarantee requirement, recovery was stayed and waiver of pre-deposit of the duty amount was granted.

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