Pre-deposit waiver in Section 11D disputes denied where collections may prima facie represent duty and facts need fuller examination.

At the pre-deposit stage, the Tribunal found no prima facie basis for complete waiver in a demand under section 11D, because the available material required fuller factual examination before final determination. The plea that section 35F did not apply to such a demand was rejected at that interim stage. The Tribunal also treated the service charges collected after entry into the Compounded Levy Scheme as potentially representing duty collected from customers and not deposited with the Government, so the amount could not be shown to fall outside section 11D. Partial interim relief was granted subject to substantial pre-deposit.

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Issues: (i) whether a prima facie case was made out for total waiver of pre-deposit in respect of the demand raised under section 11D; (ii) whether the amount collected as service charges could be treated, at the stay stage, as duty collected from customers and not deposited with the Government.

Issue (i): whether a prima facie case was made out for total waiver of pre-deposit in respect of the demand raised under section 11D.

Analysis: The application was considered at the stage of waiver of pre-deposit. The Tribunal held that a detailed examination of the facts was necessary before arriving at a final conclusion and that, on the material available, the applicant had not established a case for complete waiver. The plea that section 35F did not apply to a demand raised under section 11D was rejected at the prima facie stage.

Conclusion: No case for total waiver of pre-deposit was made out.

Issue (ii): whether the amount collected as service charges could be treated, at the stay stage, as duty collected from customers and not deposited with the Government.

Analysis: The Tribunal noticed that the applicant had started collecting service charges after entering the Compounded Levy Scheme, that the recipients' statements indicated that the additional amounts represented duty at least partly, and that the director of the applicant company also supported that position to some extent. On that prima facie material, the amount was treated as potentially falling within the scope of section 11D for the purpose of interim relief.

Conclusion: The amount could not be treated as shown to be outside section 11D at the stay stage.

Final Conclusion: Partial interim relief was granted by directing a substantial pre-deposit, and the appeal was left to proceed subject to compliance.

Ratio Decidendi: At the stage of waiver of pre-deposit, where the available material prima facie indicates that amounts collected may represent duty and further factual examination is required, complete waiver is not warranted.

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