Prima facie case for waiver of pre-deposit accepted where Modvat credit was reversed and fraudulent intent was denied.

Prima facie case was shown for waiver of pre-deposit of a penalty imposed under Rule 173Q of the Central Excise Rules, 1944, because the disputed Modvat credit had already been reversed before the adjudication order and the applicants denied any fraudulent intention. On the limited stay question, the Tribunal held that these facts justified protection against immediate recovery, and recovery of the penalty was stayed during pendency of the appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit of the penalty imposed under Rule 173Q of the Central Excise Rules, 1944.

Analysis: The applicants contended that the disputed Modvat credit relating to additional duty had already been reversed before the adjudication order and that there was no intention to take credit fraudulently. On this basis, the Tribunal assessed only the limited question relevant to stay, namely whether the applicants had shown a prima facie case against recovery of the penalty during the pendency of the appeal.

Conclusion: The applicants had made out a prima facie case for waiver of the condition of pre-deposit, and recovery of the penalty was stayed during the pendency of the appeal.

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