Arguable Modvat credit dispute led to partial pre-deposit and stay of recovery pending appeal

Interpretation of Rule 57C and Rule 57CC in a Modvat credit dispute over inputs used exclusively in exempted tractors was considered fairly arguable. On that basis, the Tribunal declined complete waiver of pre-deposit, directed a limited deposit, and protected the applicants from recovery of the balance during the appeal, subject to compliance with the deposit direction.

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Issues: Whether the applicants were entitled to waiver of the balance pre-deposit and stay of recovery in a dispute concerning denial of Modvat credit on inputs used exclusively in exempted tractors.

Analysis: The dispute turned on the interpretation of Rule 57C and Rule 57CC. The Tribunal noted that the matter was fairly arguable and that the applicants had already been directed to deposit a limited amount. In these circumstances, complete waiver was not granted, but protection was afforded against recovery of the balance amount during the pendency of the appeal upon compliance with the partial deposit direction.

Conclusion: Partial relief was granted to the applicants by requiring a pre-deposit of Rs. 2 lakhs and staying recovery of the balance during the appeal.

Ratio Decidendi: Where the dispute on Modvat credit involves an arguable interpretation of the relevant rules, the Tribunal may direct a limited pre-deposit and grant stay of recovery for the balance pending appeal.

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