Ambiguous Modvat input dispute and prima facie case justified waiver of pre-deposit with revenue-protective interim security.

Ambiguity in the demand notice over whether rear-view mirrors were cleared separately or with the vehicles supported a prima facie case for interim relief. The Tribunal also noted that the materials did not clearly establish retrospective application of the amended Rule 57A to every separate clearance. To safeguard revenue, it directed the appellant to maintain unutilised Modvat credit as interim security while granting waiver of pre-deposit and stay of recovery of duty and penalty.

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Issues: Whether the applicant was entitled to waiver of pre-deposit and stay of recovery in the appeal concerning duty demand on rear-view mirrors claimed as Modvat inputs.

Analysis: The Tribunal found the notice to be ambiguous on whether the mirrors were cleared separately or along with the vehicles. The earlier basis for stay depended on clearance along with the final product, and the materials placed did not prima facie establish that the amendment to Rule 57A had retrospective application so as to cover every separate clearance. In view of the ambiguity and the prima facie case, the Tribunal considered it appropriate to secure the revenue by directing maintenance of unutilised Modvat credit to the extent of Rs. 30 lakhs during the appeal.

Conclusion: Waiver of pre-deposit was granted on compliance with the condition to keep unutilised Modvat credit of Rs. 30 lakhs, and recovery of the duty and penalty was stayed.

Final Conclusion: The appeal proceeded without immediate deposit of the disputed amount, subject to maintenance of the specified Modvat credit balance as interim security.

Ratio Decidendi: Where the demand notice is ambiguous and a prima facie case is shown, the Tribunal may grant waiver of pre-deposit and stay recovery on terms sufficient to safeguard the revenue.

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