Modvat credit dispute: procedural non-compliance was arguable, but interim stay against recovery was made conditional on deposit.

In a Modvat credit dispute, the applicants argued that substantive credit should not be denied for procedural non-compliance, despite the admitted absence of prior permission before clearing packing material. The tribunal found the objection arguable but held that the rival contentions required examination of the case law and evidence before final relief could be considered. Interim protection against recovery was therefore continued only on condition of a deposit, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the applicants were entitled to interim protection against recovery in a Modvat credit dispute, and whether the points raised required detailed examination before final relief could be granted.

Analysis: The applicants did not dispute the absence of prior permission before clearing packing material, but the pleaded objection that the substantive Modvat benefit should not be denied for procedural non-compliance was found arguable. As the rival contentions would require examination of the case law and evidence on record, immediate final relief was not granted at the stay stage. Instead, the applicants were directed to make a deposit as a condition for continuance of the stay against demand and recovery.

Conclusion: Interim relief was granted only on condition of deposit, and recovery was stayed pending disposal of the appeal.

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