Modvat credit on construction materials was not prima facie established, so stay was made conditional on deposit and bank guarantee.

Steel plates, angles, bars and ceramic tiles were considered prima facie to be constructional materials rather than machinery, accessories or parts of machines, so eligibility for Modvat credit as capital goods under Rule 57Q was not established at the interim stage. On that prima facie view, the balance of convenience was found to favour the Revenue, and conditional protection was granted only on part deposit of the disputed amount and furnishing of a bank guarantee for the balance. Stay against recovery and waiver of the remaining pre-deposit were therefore made subject to compliance with those conditions.

---

---

Issues: Whether the items such as steel plates, angles, bars and ceramic tiles were prima facie eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, and whether stay and waiver of pre-deposit should be granted on that basis.

Analysis: The items in question were viewed as being more in the nature of constructional materials than machinery, accessories, or parts of machines. On that prima facie view, eligibility for Modvat credit as capital goods was not established. The balance of convenience was therefore considered to lie in favour of the Revenue, and conditional protection was granted only on deposit of part of the disputed amount and furnishing of bank guarantee for the balance.

Conclusion: The applicants were required to secure the disputed amount by deposit and bank guarantee, and stay against recovery with waiver of the balance pre-deposit was available only upon compliance.

---