EPCG non-compliance and revenue risk justified denial of full waiver, with only conditional pre-deposit relief granted.

Non-compliance with EPCG notification conditions led the Tribunal to reject a stay against confiscation of imported goods. It also declined complete waiver of pre-deposit of duty and penalty because the appellants had not fulfilled the export obligation and revenue interest required protection. Balancing hardship against security of the demand, the Tribunal granted only conditional relief by directing a limited pre-deposit and waiving the balance for the time being. The note reflects the principle that full waiver is not warranted where exemption conditions remain unmet and the revenue is at risk.

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Issues: (i) Whether stay against confiscation could be granted in the circumstances. (ii) Whether waiver of pre-deposit of duty and penalty was justified, and if not, what amount should be deposited.

Issue (i): Whether stay against confiscation could be granted in the circumstances.

Analysis: The imported goods had been confiscated for non-compliance with the conditions of the notification governing the EPCG scheme. In those circumstances, a stay against the confiscation order was not considered appropriate.

Conclusion: Stay against confiscation was rejected.

Issue (ii): Whether waiver of pre-deposit of duty and penalty was justified, and if not, what amount should be deposited.

Analysis: The appellants had not fulfilled the notification conditions and had not discharged the duty liability. The plea that the demand should be scaled down did not justify full waiver, particularly when the revenue interest had to be safeguarded. The Tribunal nevertheless considered the appellants' own estimate of liability and balanced hardship against the need for security.

Conclusion: Partial waiver was granted on condition that Rs. 50,00,000 be pre-deposited, with the balance of duty and penalty waived on compliance.

Final Conclusion: The application for complete waiver and stay was declined, but conditional relief was granted by directing a limited pre-deposit and waiving the balance for the time being.

Ratio Decidendi: Where the appellant has not complied with the conditions of an exemption or export obligation scheme, and the revenue is at risk, full waiver of pre-deposit need not be granted; limited relief may be conditioned on a substantial deposit to safeguard revenue.

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