Modvat credit on cooling-water chemicals justified waiver of pre-deposit at the stay stage.

Water-treatment chemicals used in cooling water were treated as eligible for Modvat credit on the strength of earlier Tribunal decisions, and the departmental representative accepted that the issue was covered against the Revenue. On that basis, the appellant established a prima facie case at the stay stage for waiver of pre-deposit of the duty and penalty arising from denial of Modvat credit. Pre-deposit was waived pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in respect of the demand of duty and penalty arising from the denial of Modvat credit on chemicals used in cooling water for manufacture.

Analysis: The earlier Tribunal decisions relied upon treated water-treatment chemicals used for cooling water as eligible for Modvat credit, and the departmental representative fairly accepted that the issue was covered against the Revenue. On that basis, the appellant was found to have established a prima facie case at the stay stage.

Outcome: Pre-deposit of the duty and penalty amounts was waived pending disposal of the appeal.

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