CENVAT debit during forfeiture period cannot substitute prescribed duty payment, justifying only partial stay relief.

Clearing goods during a forfeiture period by debiting CENVAT credit, instead of paying duty through the prescribed account current, was treated as clearance without payment of duty because the rules and the forfeiture order required consignment-wise payment in the account current. That breach meant the applicants failed to show a strong prima facie case for complete waiver of pre-deposit and stay. Interim relief was therefore granted only partly, subject to a partial pre-deposit, with the balance of duty and penalties kept in abeyance on compliance.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay, and whether the clearances made during the forfeiture period by debiting CENVAT account could be treated as clearances without payment of duty.

Analysis: During the currency of the forfeiture order, the applicants were required to pay duty on a consignment basis by debiting duty in the account current under Rule 8(4) of the Central Excise Rules, 2001. Instead, they cleared the goods by debiting CENVAT credit, which was specifically prohibited. Such clearances were therefore treated as clearances without payment of duty. On this basis, the applicants failed to establish a strong prima facie case for complete waiver of the duty and penalty demand at the stay stage.

Conclusion: The applicants were directed to deposit Rs. 50 lakhs towards duty, and upon such deposit the further deposit of duty and the penalties imposed were waived.

Final Conclusion: Interim relief was granted only in part, subject to a partial pre-deposit, with the remaining demand and penalties kept in abeyance on compliance.

Ratio Decidendi: Where assessee clearances are made in breach of a valid order requiring payment through account current, debiting CENVAT credit contrary to the rules does not establish a strong prima facie case for complete waiver of pre-deposit.

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