Modvat credit declaration filing as a procedural lapse supported an unconditional stay of duty recovery and penalty.

At the stay stage, the Tribunal declined to finally resolve the interpretation of Rules 57G and 57H, focusing instead on whether recovery of duty demand and penalty should be suspended pending appeal. It accepted that filing the Modvat declaration with the Superintendent rather than the Assistant Commissioner could be a procedural lapse, and that this contention had force where the other conditions for credit were said to be satisfied. On that balance of convenience, unconditional stay of recovery of the duty demand and stay of the penalty were granted until disposal of the appeal on merits.

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Issues: Whether, at the stay stage, recovery of duty demand and penalty should be stayed where Modvat credit was denied on the ground that the declaration under Rule 57H was filed with the Superintendent instead of the Assistant Commissioner.

Analysis: The Tribunal noted that it was not necessary at the stay stage to finally decide the controversy on the interpretation of Rules 57G and 57H. On balance of convenience, the assessee's contention that filing before the Superintendent was, at worst, a procedural lapse had some force, particularly where other conditions for credit were said to be satisfied.

Conclusion: Unconditional stay of recovery of the duty demand and stay of the penalty were granted pending disposal of the appeal on merits.

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