Modvat credit on testing inputs justified waiver of pre-deposit and stay of recovery pending appeal.

Prima facie entitlement to Modvat credit on inputs used for testing the manufactured machine was considered sufficient for interim relief, as later decisions supported admissibility where testing formed part of the manufacturing process. Although an adverse order existed in the applicants' own case, the Tribunal held that the issue warranted deeper examination at the appeal stage, including possible reference to a Larger Bench. Waiver of pre-deposit was therefore granted and recovery of the disputed amount was stayed pending disposal of the appeal.

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Issues: Whether the applicants made out a prima facie case for waiver of pre-deposit and stay of recovery in the appeal concerning admissibility of Modvat credit on inputs used for testing the final product.

Analysis: The Tribunal noted the appellants' reliance on subsequent decisions supporting admissibility of credit where inputs are used in testing the manufactured machine as part of the manufacturing process. It also noted the existing adverse order in the appellants' own case but observed that the matter may require deeper examination at the appeal stage, including consideration of reference to a Larger Bench.

Outcome: The stay petition was allowed, waiver of pre-deposit was granted, and recovery of the disputed amount was stayed during the pendency of the appeal.

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