Pre-deposit waiver for penalty dispute where imported potassium chloride was alleged to be ineligible for exemption pending appeal.

Penalty was imposed because the imported potassium chloride was treated as industrial grade and, on that basis, as not eligible for exemption under Notification No. 11/97-Cus. as Muriate of Potash. At the stay stage, the tribunal considered only whether a case was made out for waiver of pre-deposit, noting that no duty demand had been raised and the dispute concerned penalty alone. On that footing, pre-deposit of the entire penalty amount was waived and recovery was stayed pending disposal of the appeal.

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Issues: Whether pre-deposit of the penalty amount was to be waived and recovery stayed pending disposal of the appeal.

Analysis: The penalty had been imposed on the ground that the imported potassium chloride was of industrial grade and therefore not eligible for exemption under Notification No. 11/97-Cus. as Muriate of Potash. The dispute at the stay stage was limited to whether the appellants had made out a case for waiver. Since no duty had been demanded and the matter related only to penalty, the request for full waiver of pre-deposit was examined in that context.

Conclusion: Pre-deposit of the entire penalty amount was waived and recovery was stayed till disposal of the appeal.

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