Pre-deposit waiver turns on a strong prima facie challenge to demand and notice validity in customs proceedings.

A pre-deposit requirement may be waived where the record shows a strong prima facie challenge to the demand and the validity of the show cause notice. The note highlights objections that 94 consignments of components could not be clubbed as colour television sets, that Rule 2(a) of the Interpretative Rules may not apply to a complex manufacturing process, that a departmental circular under the Customs Act may not be binding, and that limitation may bar the notice absent suppression or fraud. Because the Tribunal gave only a bare refusal of complete waiver and did not reason through these issues, the deposit condition was treated as unjustified and the appeal was to proceed on merits without pre-deposit.

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Issues: Whether the order of the Tribunal directing pre-deposit of Rs. 20 crores should be set aside and waiver of pre-deposit granted on the basis of a strong prima facie case.

Analysis: The petition raised substantial questions going to the very validity of the demand, including whether 94 consignments of components could be clubbed together as colour television sets, whether Rule 2(a) of the Interpretative Rules could apply to a complex manufacturing process, whether the departmental circular issued under Section 151-A of the Customs Act, 1962 was binding, and whether the show cause notice was barred by limitation absent suppression or fraud. The Tribunal's order recorded only a bare refusal of complete waiver and did not address these issues with reasons. In the circumstances, the Court found that the petitioner had made out a strong prima facie case and that insisting on any pre-deposit was unjustified.

Conclusion: The pre-deposit condition was waived, the Tribunal's order directing deposit of Rs. 20 crores was set aside, and the appeal was directed to be heard on merits without any pre-deposit.

Ratio Decidendi: Where the record discloses a strong prima facie challenge to the demand and to the very validity of the show cause notice, a pre-deposit condition may be waived and the appeal heard on merits without insisting on deposit.

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