Modvat credit dispute and financial hardship justified waiver of pre-deposit of duty and penalty.

A prima facie case for waiver of pre-deposit was found where the Modvat credit dispute was arguable and an earlier decision appeared to support the appellant's position on input movement requirements. Financial hardship was also relevant in assessing whether deposit should be insisted upon. On that combined basis, the Tribunal considered that pre-deposit of duty and penalty was not warranted at that stage, and waiver was granted.

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Issues: Whether the appellant had made out a prima facie case for waiver of deposit of duty and penalty, and whether financial hardship justified dispensing with pre-deposit.

Analysis: The demand arose from alleged irregular availment of Modvat credit and the departmental objection that the inputs had not physically moved as required by the relevant rules. The Tribunal noted that the first issue was arguable and that, on the second issue, the appellant was prima facie covered by an earlier decision supporting its claim. It also took into account the appellant's financial condition and the relevance of hardship in considering pre-deposit. The discussion led to the view that insistence on deposit was not warranted at that stage.

Conclusion: The appellant was entitled to waiver of deposit of the demanded duty and penalty.

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