Pre-deposit waiver and extended limitation: absence of prima facie suppression justified stay of recovery pending appeal.

A prima facie case was found for waiver of pre-deposit where the department had not shown suppression of facts to justify invocation of the extended limitation period. Exemption under Notification No. 6/94 was refused on the view that the product was not a bulk drug because it was not listed in the pharmacopoeia, but the classification list had been approved from 1991 and there was no material showing misdeclaration accepted by the department. Although the omission to state the pharmacopoeia position was not fully explained, the available material did not support denial of stay relief at that stage, and recovery remained stayed pending appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit of duty and penalties on the ground that there was no suppression of facts and, therefore, the extended period of limitation was not available to the department.

Analysis: The exemption under Notification No. 6/94 was denied on the footing that the product was not a bulk drug as it did not figure in the pharmacopoeia. The record showed that the classification list had been approved from 1991 onwards and there was no material to show a misdeclaration in the declaration acted upon by the department. Although the explanation for the omission to mention the pharmacopoeia position was not fully convincing, the available material did not prima facie establish suppression of facts so as to justify denial of relief at the stay stage.

Conclusion: The applicants were entitled to waiver of pre-deposit of the duty and penalties and recovery was stayed during the pendency of the appeal.

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