Modvat credit and manufacture dispute supported unconditional stay and waiver of pre-deposit on a strong prima facie case.

Unconditional stay and dispensation of pre-deposit were granted where the appeal raised a prima facie arguable question whether blending imported and indigenous kerosene constituted manufacture for Modvat credit purposes. The appellant's prior declaration under Rule 57G and the revenue's earlier acceptance of the same process supported interim relief. The duty demand also appeared prima facie vulnerable on limitation because the objection was raised only after substantial delay despite the declaration being on record. On these facts, a strong prima facie case for stay was made out.

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Issues: Whether the appellant was entitled to unconditional stay and dispensation of pre-deposit in the appeal challenging denial of Modvat credit and the consequential duty demand.

Analysis: The dispute raised a prima facie arguable question whether blending imported and indigenous kerosene amounted to manufacture. The earlier conduct of the revenue in accepting the same process and collecting duty without objection, together with the filing of a declaration under Rule 57G, supported the appellant's plea. The demand also appeared prima facie vulnerable on limitation, since the objection was raised after a substantial delay despite the declaration being on record. In these circumstances, a strong prima facie case was made out for interim relief.

Conclusion: The stay petition was allowed unconditionally and pre-deposit was dispensed with.

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