Debatable customs valuation issue can justify only partial pre-deposit, with balance duty and penalty stayed pending appeal.

A stay application on valuation objections concerning sales by a hundred per cent export oriented unit to the domestic tariff area treated the applicability of Rule 7 of the Customs Valuation Rules, including deductions from sale price, as a debatable issue. Although financial hardship was raised, the materials did not justify a complete waiver of pre-deposit. Full waiver was therefore declined, and conditional interim relief was granted by requiring a substantial pre-deposit while staying the balance duty and penalty pending the appeal, subject to compliance.

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Issues: Whether complete waiver of pre-deposit of duty and penalty was justified pending appeal.

Analysis: The demand involved valuation objections in respect of sales by a hundred per cent export oriented unit to the domestic tariff area. The application of Rule 7 of the Customs Valuation Rules to such sales, including deductions from sale price, was treated as a highly debatable question. The plea of financial difficulty was also considered, but the materials did not justify total waiver.

Conclusion: Complete waiver of pre-deposit was ed. Partial waiver was granted subject to pre-deposit of Rs. 60 lakhs, and the balance duty and penalty were stayed pending disposal of the appeal upon compliance.

Final Conclusion: The request for full waiver was declined, but the assessee obtained conditional interim relief by securing stay of the remaining demand and penalty on compliance with the ordered deposit.

Ratio Decidendi: In a stay application, where the valuation issue is debatable and financial hardship is shown but not enough for total exemption, the appellate forum may require a substantial pre-deposit while granting balance waiver pending appeal.

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