Prima facie unsustainable demand and hardship justified full waiver of pre-deposit and stay of recovery pending appeal.

Prima facie unsustainability of the demand and confiscation orders justified interim relief where the duty demands on goods lying in the EOU premises, the treatment of confiscated goods, and the alleged denial of natural justice were all disputed on the record. The tribunal also accepted that the appellants had shown serious hardship from the adverse financial consequences and stoppage of production. Full waiver of pre-deposit was therefore granted, and recovery of duty, interest and penalty was stayed pending final hearing.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery pending appeal on the basis of the prima facie case and hardship shown.

Analysis: The demand and confiscation orders were found, at the stay stage, to be unsustainable prima facie in several material respects, including the treatment of confiscated goods, the basis of duty demands on goods lying within the EOU premises, and the alleged denial of natural justice where the charge rested on disputed documents and statements. The order also noted that the huge quantum of demand, interest, penalty, and stoppage of production created serious hardship, and that the appellants had made out a case for interim protection under the pre-deposit provisions.

Conclusion: Full waiver of pre-deposit was granted and recovery of duty, interest, and penalty was stayed pending final hearing of the appeals.

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