Revenue-neutral Modvat credit in job-work supply justified unconditional stay and waiver of pre-deposit.

In a job-work arrangement under Rule 57F(2), duty on floor plates manufactured by the appellant and returned to TELCO was treated as revenue-neutral because TELCO was entitled to Modvat credit on the duty paid, including any differential duty. On that basis, the duty burden would merely circulate as credit without causing real loss to revenue. The document states that this revenue-neutrality justified unconditional stay of recovery and waiver of pre-deposit.

---

---

Issues: Whether pre-deposit of the demanded duty and recovery could be stayed where the appellant manufactured floor plates under Rule 57F(2) and the recipient was entitled to Modvat credit, resulting in no loss of revenue.

Analysis: The floor plates were admittedly manufactured by the appellant and returned to TELCO for use in the assembly of excavators cleared on payment of duty. TELCO was already taking Modvat credit of the duty paid on the floor plates, and would have taken credit of any differential duty as well. In these circumstances, the duty burden, if charged on the intrinsic value including the supplied components, would only circulate as credit without causing any real loss to the revenue.

Conclusion: The appellant was entitled to unconditional stay of recovery and waiver of pre-deposit.

Ratio Decidendi: Where the same duty paid on goods supplied in a job-work arrangement would be available as Modvat credit to the recipient, the demand is revenue-neutral and furnishes a basis for unconditional stay and waiver of pre-deposit.

---