Pre-deposit waiver on classification dispute: Tribunal accepted a prima facie case for grey synthetic fabrics under Chapter 54.

Pre-deposit in customs/excise appeals may be waived in part where the appellant shows a prima facie dispute on classification and recovery would be inappropriate pending appeal. On the stated facts, the Tribunal considered the defence that the goods were grey synthetic fabrics under Chapter 54 rather than industrial fabrics under Chapter 59, and found prima facie force in that position. It therefore directed a partial deposit of duty and stayed recovery of the balance duty and penalties until disposal of the appeals.

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Issues: Whether pre-deposit of the confirmed duty and penalties should be waived pending the appeals, and whether the demand relating to fabrics was prima facie unsustainable on the ground that the goods were grey synthetic fabrics classifiable under Chapter 54 rather than industrial fabrics under Chapter 59.

Analysis: The Tribunal found prima facie force in the contention that the demand of Rs. 1,86,381/- had been confirmed without proper consideration of the defence that the goods were not industrial fabrics under Chapter 59 but grey synthetic fabrics under Chapter 54. Having regard to the totality of the facts and circumstances, it directed a partial pre-deposit of Rs. 50,000/- towards duty and ordered waiver of the balance duty and penalties with stay of recovery pending the appeals.

Outcome: Partial waiver of pre-deposit granted, subject to deposit of Rs. 50,000/- within the stipulated time, with the balance duty and penalties stayed pending disposal of the appeals.

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