Conditional stay on pre-deposit turns on prima facie Modvat credit issue and proof of financial hardship.

Conditional stay under section 35F was considered appropriate where the appeal raised an arguable issue on the effect of the non obstante clause in rule 57B and the admissibility of Modvat credit on HSD oil for the relevant period. The Tribunal treated the unresolved treatment of that point by the lower authorities as supporting a prima facie case for interim relief. However, the applicant did not produce sufficient documentary evidence of financial hardship, and the balance of convenience was not accepted in its favour. Conditional relief was therefore granted subject to a pre-deposit within the stipulated time, failing which the appeal could be dismissed.

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Issues: Whether the applicant was entitled to a conditional stay of recovery pending appeal, having regard to prima facie case, undue hardship, and the requirement of pre-deposit under section 35F.

Analysis: The Tribunal found that the appeal raised an arguable question on the effect of the non obstante clause in rule 57B and on the admissibility of Modvat credit on HSD oil for the period in dispute. The Tribunal also noted that the lower authorities had not adequately dealt with this aspect, which supported a prima facie case. However, the applicant failed to produce cogent documentary material to establish financial hardship, and the plea of balance of convenience was not accepted. In these circumstances, the Tribunal treated the matter as fit for conditional relief under section 35F.

Conclusion: Conditional stay was granted, and the applicant was directed to pre-deposit Rs. 50,000 within four weeks, failing which the appeal could be dismissed.

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