Modvat credit dispute under Rule 57C: full pre-deposit waiver refused, but partial stay granted pending appeal.

A stay application concerning Modvat credit under Rule 57C of the Central Excise Rules was treated as raising a serious and debatable issue, including the contention that duty on the intermediate product would have given corresponding credit at another unit and that the revenue impact was neutral. The Tribunal declined full waiver of the pre-deposit, but granted partial interim protection by requiring a deposit of Rs. 2 lakhs and staying recovery of the balance during the appeal.

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Issues: Whether the applicants were entitled to waiver of the entire pre-deposit and stay of recovery pending appeal in a dispute involving Modvat credit under Rule 57C of the Central Excise Rules.

Analysis: The Tribunal found that the controversy raised a serious and debatable legal issue, since the applicants' case was that duty on the intermediate product would have enabled corresponding Modvat credit at the other unit and the revenue effect was said to be neutral. At the same time, the departmental case was not accepted as one warranting complete waiver at the stay stage, and the Tribunal directed a partial deposit as a condition for interim protection.

Conclusion: The request for full waiver was rejected, but partial relief was granted by directing a deposit of Rs. 2 lakhs and staying recovery of the balance during the pendency of the appeal.

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