Deemed Modvat credit on re-rollable steel material: pre-deposit waived after prima facie acceptance of the applicants' claim.

A stay application concerning denial of deemed Modvat credit on re-rollable steel material examined whether pre-deposit of duty should be waived. The Tribunal read the Government of India order on deemed Modvat credit together with Rule 57G of the Central Excise Rules and noted that the order did not expressly require proof that the material was duty paid, but only the stated conditions for credit eligibility. In light of conflicting judicial views and the prima facie strength of the applicants' case, the Tribunal dispensed with pre-deposit, directed early hearing of the appeals, and kept recovery of penalty stayed pending appeal.

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Issues: Whether pre-deposit of duty should be dispensed with in a stay application concerning denial of deemed Modvat credit on re-rollable steel material.

Analysis: The applications turned on the terms of the Government of India order governing deemed Modvat credit and the scope of Rule 57G of the Central Excise Rules. The Tribunal noted that the relevant order did not expressly require proof that the re-rollable material was duty paid and only prescribed the stated conditions for availability of the credit. In view of the conflicting views noticed in the cited decisions and the prima facie force in the applicants' contention, the Tribunal found a case for dispensing with pre-deposit.

Conclusion: Pre-deposit of duty was dispensed with, the appeals were directed for early hearing, and recovery of penalty remained stayed during the pendency of the appeal.

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