Modvat credit and minor procedural lapse justified waiver of pre-deposit on prima facie case and balance of convenience

Modvat credit was claimed to have been denied only because of a minor procedural lapse, while a Board circular clarified that such credit should not be rejected on that basis. The Tribunal found that the circular supported a prima facie case and that the balance of convenience favoured the applicants. On that footing, pre-deposit of the disputed duty was waived and the appeal was allowed to proceed without insisting on deposit.

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Issues: Whether the appellants were entitled to waiver of pre-deposit of the disputed duty in the light of the Board's circular clarifying that Modvat credit should not be denied for minor procedural lapse.

Analysis: The Tribunal noted that the invoices had been denied credit on a procedural objection, but the appellants relied on the Board's circular issued after Notification No. 7/99-C.E., which clarified that Modvat credit should not be rejected merely for minor procedural lapses. On that basis, the Tribunal found a prima facie case and held that the balance of convenience favoured the applicants.

Conclusion: The pre-deposit of the whole duty was waived for hearing of the appeal, in favour of the appellants.

Final Conclusion: Interim relief was granted and the appeal was directed to proceed without insisting on deposit of the disputed duty.

Ratio Decidendi: Where the assessee shows a prima facie case supported by a clarificatory circular and the dispute turns on a minor procedural lapse, pre-deposit may be waived on the balance of convenience.

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