Pre-deposit waiver for penalty accepted where Modvat reversal, RG 1 entries, and BIFR reference supported a prima facie case.

Pre-deposit of penalty was considered for waiver pending appeal where the assessee had filed declarations under Rule 57F(17)(b), reversed Modvat credit for goods described as semi-finished, and showed those goods in the declarations. The Tribunal found a prima facie case that the goods should have been entered in the final RG 1 records and also noted that the reference had been registered before the BIFR, engaging the protection against continuation of proceedings against an industrial unit after such registration. On that basis, the pre-deposit condition was dispensed with and stay was granted unconditionally.

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Issues: Whether the pre-deposit condition of the penalty amount could be dispensed with pending appeal.

Analysis: The applicants had made declarations under Rule 57F(17)(b) and reversed Modvat credit in respect of goods shown as semi-finished, and the record indicated that the disputed goods had been reflected in those declarations. The Tribunal found a prima facie case that the goods ought to have been entered in the final RG 1 records, and also noted that the applicants' reference had been registered before the BIFR, attracting the protection recognised in the governing law regarding suspension of legal proceedings against an industrial unit after registration of reference.

Conclusion: The pre-deposit condition was dispensed with and the stay petition was allowed unconditionally in favour of the assessee.

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