Modvat credit on air-conditioners as capital goods: partial pre-deposit ordered, with balance duty and penalty stayed.

Entitlement to full waiver of pre-deposit in a stay application turned on whether air-conditioners used in the manufacture of hair dye qualified as capital goods under Rule 57Q of the Central Excise Rules for Modvat credit. The scope of capital goods and the role of the equipment in the manufacturing process were treated as arguable, but the merits were not examined in detail at the stay stage. Full waiver was refused, and the applicants were directed to deposit Rs. 30,000; on that deposit, the balance duty and penalty were dispensed with and recovery remained stayed.

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Issues: Whether the applicants were entitled to waiver of the full pre-deposit of duty and penalty in a stay application concerning denial of Modvat credit on air-conditioners claimed as capital goods under Rule 57Q of the Central Excise Rules.

Analysis: The dispute required examination of the scope of capital goods under Rule 57Q and the role of the air-conditioners in the manufacture of hair dye. The issue was considered arguable, but the merits could not be gone into in detail at the stay stage.

Conclusion: Full waiver was not granted. The applicants were directed to deposit Rs. 30,000, and on such deposit the balance duty and penalty stood dispensed with and recovery remained stayed.

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