Modvat credit dispute: prima facie challenge to action beyond the show-cause notice supported waiver of pre-deposit and stay of recovery.

Modvat credit on cotton fabric was challenged on the basis that the appellate authority had gone beyond the show-cause notice by applying Rule 57C, relying on notifications not cited in the notice, and imposing penalty without a proposal. The Tribunal treated these objections as giving the appellants a stronger prima facie case for interim relief. On that basis, the earlier ad interim stay was confirmed, pre-deposit was waived, and recovery of duty and penalty remained stayed pending appeal.

---

---

Issues: Whether the appellants had made out a prima facie case for confirmation of the earlier interim stay and waiver of pre-deposit in a proceeding concerning Modvat credit, where the appellate authority had invoked a different rule and imposed penalty without proposal in the show-cause notice.

Analysis: The dispute arose from denial of Modvat credit on cotton fabric said to be an input under Rule 57A. The appeal raised objections that the appellate authority had travelled beyond the show-cause notice by confirming demand under Rule 57C, relying on notifications not referred to in the notice, and imposing penalty without any proposal. The Tribunal noted that the appellants had a stronger prima facie case, particularly in view of the objection that the appellate authority had gone beyond the scope of the original notice and order.

Conclusion: The earlier ad interim stay was confirmed and waiver of pre-deposit was granted, with recovery of duty and penalty stayed during pendency of the appeal.

---