Modvat credit on capital goods stayed only on partial pre-deposit after an arguable manufacturing-use claim.

In an interim stay application under Rule 57Q of the Central Excise Rules, 1944, the assessee sought complete waiver of pre-deposit against denial of Modvat credit on hose pipes and stopper motor cards treated as capital goods. The claim that the items were used in or in relation to manufacture of steel and iron was considered arguable, but their precise role required detailed examination at final hearing. Complete waiver was therefore refused, and only partial pre-deposit was directed. Recovery of the balance demand was stayed, subject to the reduced deposit.

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Issues: Whether the appellant was entitled to complete waiver of pre-deposit in respect of the demand arising from denial of Modvat credit on hose pipes and stopper motor cards treated as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The dispute was confined to an interim application for dispensation of pre-deposit. The goods in question were claimed to be used in the manufacturing process or in relation to manufacture of steel and iron, while the Department had treated them as not falling within capital goods. On the material placed, the claim was regarded as arguable and the role of the goods in manufacture was left for detailed examination at final hearing. In that view, complete waiver was not granted and a partial deposit was directed, with stay of recovery of the balance.

Conclusion: Complete waiver of pre-deposit was refused, but the appellant obtained partial relief by being directed to deposit a reduced amount and securing stay of recovery for the remainder.

Final Conclusion: The interim application was allowed only to the extent of granting conditional stay on the balance demand after partial pre-deposit.

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