Pre-deposit waiver on excise duty default turns on prima facie validity of deemed credit payment and interim stay of recovery.

Rule 8 of the Central Excise Rules, 2001 required payment of outstanding duty with interest where duty was not paid by the due date. The challenge concerned alleged default in fortnightly duty payment and part-payment through a deemed credit account. The objection to part-payment through that account was held not prima facie sustainable because no order had debarring that mode of payment. On that basis, the applicants were found to have made out a strong prima facie case for interim relief, and waiver of pre-deposit with stay of recovery was granted pending appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the duty and penalty demanded for alleged default in fortnightly payment of duty and part-payment through deemed credit account.

Analysis: The demand arose from an alleged default under Rule 8 of the Central Excise Rules, 2001. Rule 8(3) provides for payment of the outstanding duty together with interest where duty is not paid by the due date. The objection regarding part-payment through the deemed credit account was held to be not prima facie sustainable in the absence of any order debarring such mode of payment. On this basis, the applicants established a strong prima facie case for interim relief.

Conclusion: The application for waiver of pre-deposit was allowed and recovery of duty and penalty was stayed pending the appeal.

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