Prima facie case under lapsed excise rule led to waiver of pre-deposit and stay of recovery pending appeal.

Applicants challenged a demand issued under Rule 10 of the Central Excise Rules, 1944 on the ground that the rule had ceased to operate after 16-11-1980 and had not been revalidated. CESTAT found a strong prima facie case in favour of the applicants and, on that basis, waived pre-deposit of the adjudged duty and penalty. Recovery was stayed until disposal of the appeal.

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Issues: Whether the applicants were entitled to waiver of pre-deposit of duty and penalty and stay of recovery during pendency of the appeal.

Analysis: The show cause notice was issued under Rule 10 of the Central Excise Rules, 1944 for the period in question. On the applicants' contention that Rule 10 had ceased to operate after 16-11-1980 and that there was no revalidation thereafter, the Tribunal found that a strong prima facie case was made out in their favour. In such circumstances, pre-deposit of the adjudged duty and penalty was not insisted upon and recovery was directed to remain stayed till disposal of the appeal.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed in favour of the applicants.

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