Prima facie case for waiver of pre-deposit limited interim relief where duty-free goods were allegedly diverted to the domestic market

Duty-free imports under Notification No. 53/97-Cus. were linked to an export obligation, and the interim relief turned on whether a prima facie case existed for unconditional waiver of pre-deposit. The record showed statements admitting that the finished goods were not exported but diverted to the local market, with corroboration from records; retraction at the stay stage did not dislodge that material, and no evidence was produced to show use of the imported fabrics in exported goods. Partial waiver was therefore granted only to the extent of 50% of the confirmed duties, with stay limited accordingly. A co-applicant was given unconditional stay because no sufficient material of his involvement or abetment was shown at the interim stage.

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Issues: (i) Whether the appellant against whom substantial customs duty, central excise duty and penalties were confirmed had made out a prima facie case for unconditional waiver of pre-deposit and stay of recovery. (ii) Whether the co-applicant was entitled to unconditional stay in the absence of material showing his involvement in the alleged evasion.

Issue (i): Whether the appellant against whom substantial customs duty, central excise duty and penalties were confirmed had made out a prima facie case for unconditional waiver of pre-deposit and stay of recovery.

Analysis: The demand arose from duty-free imports under Notification No. 53/97-Cus. coupled with an alleged obligation to export the finished products. The order records admissions in statements that the manufactured goods were not exported and were diverted to the local market, with corroboration from the records. It further notes that the retraction of statements was of no assistance at the stay stage and that no evidence had been produced to show use of the imported fabrics in exported goods. On that basis, the appellant was not found to have established a prima facie case for full waiver.

Conclusion: The appellant was directed to deposit 50% of the confirmed duties within the stipulated period, and waiver of the balance pre-deposit and stay of recovery were granted only to that extent.

Issue (ii): Whether the co-applicant was entitled to unconditional stay in the absence of material showing his involvement in the alleged evasion.

Analysis: The order notes the submission that there was no material showing abetment by the co-applicant and that the show cause notice had proposed penalty under a different provision. In the absence of a sufficient basis shown at the stay stage to sustain a pre-deposit requirement against him, unconditional relief was considered appropriate.

Conclusion: The stay petition of the co-applicant was allowed unconditionally.

Final Conclusion: The stay applications were disposed of by granting only partial waiver and stay to the main appellant and unconditional stay to the co-applicant, leaving the substantive appeal to be decided on merits.

Ratio Decidendi: Waiver of pre-deposit depends on the establishment of a prima facie case at the interim stage, and where the record indicates admitted diversion of duty-free goods to the domestic market, only limited waiver may be granted.

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