Modvat credit dispute and limitation on suppression justified waiver of pre-deposit and stay of recovery pending appeal.

Prima facie waiver of pre-deposit was justified where Modvat credit was denied only on a procedural infraction, while the record showed no allegation that the inputs were not received or not duty paid. Credit had been taken on the basis of the manufacturer's invoices, and those invoices were produced before the jurisdictional excise authorities for defacement. On that footing, the extended limitation period was prima facie unsustainable because suppression was not made out. The Tribunal therefore dispensed with pre-deposit of duty and penalty and stayed recovery pending appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit in respect of the duty and penalty confirmed on account of denial of Modvat credit, and whether the demand was prima facie barred by limitation.

Analysis: The Tribunal noted that earlier show cause notices on the same basis for the later period had been dropped as a technical infraction of procedural law. It further noted that there was no allegation that the inputs had not been received or that they were not duty paid, and that the appellants had taken credit on the basis of the manufacturer's invoices. The invoices had been produced before the jurisdictional Central Excise authorities for defacement, which was carried out by them, and on that footing the invocation of the extended period was prima facie unsupported by any suppression.

Outcome: The condition of pre-deposit of duty and penalty was dispensed with and recovery was stayed during pendency of the appeal.

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