Modvat credit and pre-deposit relief granted where subsidiary gate passes were issued by proper excise officers despite delayed application.

A stay application challenging denial of Modvat credit on the ground that the subsidiary gate pass application was not made 24 hours before removal of goods was allowed. The applicants were held to have a prima facie case because the subsidiary gate passes had in fact been issued by the proper Central Excise officers, and the delay in seeking them could not, at the interim stage, justify refusal of credit. On that basis, the pre-deposit condition was dispensed with unconditionally and the stay petition was allowed, while the main appeal remained pending.

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Issues: Whether pre-deposit of the confirmed duty and penalty should be waived in a stay application where Modvat credit had been denied on the ground that the application for subsidiary gate pass was not made 24 hours in advance of removal of goods.

Analysis: The applicants were found to have a prima facie case because the subsidiary gate passes had in fact been issued by the proper Central Excise officers. In these circumstances, the delay in making the application could not, at the interim stage, be treated as a sufficient basis for denying Modvat credit.

Outcome: The condition of pre-deposit was dispensed with unconditionally and the stay petition was allowed. The main appeal remained pending for hearing.

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