Uncorroborated evidence and retracted statements failed to justify pre-deposit, securing unconditional waiver and stay of recovery.

Uncorroborated third-party loose sheets and a retracted statement, without invoices, gate passes, seizure material, buyer statements, or other independent evidence, were held insufficient to justify insisting on pre-deposit of duty and penalties. The appellants therefore established a strong prima facie case that the alleged receipt of yarn, manufacture, and clandestine removal had not been substantiated, and the balance of convenience favoured them. Unconditional waiver of the entire duty and penalty amounts was granted, and recovery was stayed pending the appeals.

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Issues: Whether the appellants were entitled to unconditional waiver of pre-deposit of duty and penalties on the basis that the departmental case rested on uncorroborated material and did not disclose a strong prima facie case against them.

Analysis: The order noted that the alleged demand was founded mainly on loose sheets recovered from a third party and the statement of its officer, who later retracted the statement and was not produced for cross-examination. No invoice, gate pass, seizure from the appellants' premises, buyer statement, or other independent documentary evidence was found to corroborate receipt of yarn, manufacture, or clandestine removal. In these circumstances, the material relied upon did not constitute sufficient legal and substantive evidence for insisting on pre-deposit, and the appellants established a strong prima facie case. The balance of convenience was also found to be in their favour.

Conclusion: The appellants were entitled to unconditional waiver of the entire duty and penalty amounts, and recovery was stayed pending the appeals.

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