Full waiver of pre-deposit granted where waste and scrap after use raised a strong prima facie case against duty recovery.

Where the assessee showed a strong prima facie case that the cleared items were waste and scrap after use, the Tribunal held that immediate deposit of the disputed duty and penalty was not warranted. The demand had proceeded on the basis that the goods were removed after use and duty was recoverable under the prescribed depreciation formula, but on the facts presented the recovery provision was not shown to justify insisting on full pre-deposit. Full waiver of pre-deposit was granted and the appeal was allowed to proceed without deposit.

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Issues: Whether the assessee was entitled to waiver of pre-deposit of the demanded duty and penalty on the basis of a prima facie case under Rule 57S(2)(b) of the Central Excise Rules.

Analysis: The assessee was engaged in manufacture and had availed Modvat credit on rolls treated as capital goods. The demand proceeded on the footing that the goods were removed after use and duty was recoverable by applying the prescribed depreciation formula. On the facts placed before the Tribunal, the cleared items were described as waste and scrap after use, and the Tribunal found that the assessee had made out a strong prima facie case against insisting on immediate deposit of the entire disputed amount.

Conclusion: The assessee was entitled to waiver of the whole of the pre-deposit of duty and penalty.

Final Conclusion: Interim relief was granted to the assessee and the appeal was directed to proceed without any pre-deposit.

Ratio Decidendi: Where the assessee establishes a strong prima facie case on the nature of the cleared goods and the applicability of the recovery provision, pre-deposit of the disputed duty and penalty may be waived in full.

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