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Issues: Whether interim relief in the form of stay of recovery should be granted in a case where the assessee claimed exemption under Notification No. 202/88-C.E. and alternatively sought consideration of Modvat credit while disputing the balance demand.
Analysis: The demand had been worked out on the basis that certain steel sheets exceeded the prescribed thickness, and the assessee's claim to exemption was therefore under challenge. At the same time, the assessee asserted that if the exemption was denied, Modvat credit would have to be examined and would materially reduce the net duty liability. In similar circumstances, the appropriate course was to secure the revenue by requiring deposit of a substantial amount while protecting the remaining demand during the pendency of the appeal.
Conclusion: The assessee was directed to make a pre-deposit of Rs. 4 lakh within the stipulated time, and on such deposit the balance of duty and penalty recovery was stayed pending appeal.
Final Conclusion: Interim relief was granted on a conditional basis, with partial protection against recovery and a pre-deposit requirement imposed before the appeal could proceed.
Ratio Decidendi: Where exemption is disputed but an assessee raises a plausible claim that Modvat credit may reduce the net demand, the Tribunal may grant stay of the balance recovery subject to a substantial pre-deposit.
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