Waiver of pre-deposit for penalty granted on a prima facie showing that diamond sales were not inherently unlawful.

A prima facie view was taken that sale of diamonds to a person of foreign origin was not, by itself, an offence, and there was no material showing that the appellant knew the diamonds would be passed to someone intending to smuggle them out of India. On that basis, a strong case for waiver of pre-deposit was found, and the penalty pre-deposit was dispensed with while recovery remained stayed pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the penalty pending appeal.

Analysis: The order records a prima facie view that sale of diamonds to a person of foreign origin was not, by itself, an offence and that there was no material to show that the appellant knew the diamonds would be handed over to a person intending to smuggle them out of India.

Outcome: Strong prima facie case for waiver was found and the pre-deposit of penalty was dispensed with, with recovery stayed pending disposal of the appeal.

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