Pre-deposit and stay relief cannot be denied merely because sale price is below cost without evidence of flow back.

A mere comparison of selling price with cost of production, without evidence of financial flow back from buyers or other supporting circumstances, was held insufficient to deny prima facie relief in a pre-deposit and stay application. The challenge concerned rejection of transaction value and re-determination of value under the valuation rules on the basis that the goods were sold below cost. In these circumstances, the assessee was found to have established a strong prima facie case, and waiver of pre-deposit with stay of recovery of duty and penalty was granted during pendency of the appeal.

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Issues: Whether the appellant had made out a strong prima facie case for waiver of pre-deposit and stay of recovery of the duty and penalty pending disposal of the appeal.

Analysis: The application arose from a challenge to the rejection of transaction value and re-determination of value under the valuation rules on the sole basis that the selling price of the goods was below the cost of production. No allegation of financial flow back from buyers to the appellant was made. In these circumstances, the claim that the assessee was shifting price to other products did not, by itself, justify insistence on pre-deposit, and the appellant was found to have established a strong prima facie case.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery of the duty and penalty during pendency of the appeal.

Ratio Decidendi: A mere comparison of selling price with cost of production, without evidence of financial flow back or other supporting circumstances, is insufficient to deny prima facie relief in a pre-deposit/stay application.

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