Prima facie waiver of excise penalty pre-deposit granted where no confiscable goods finding was recorded

Penalties under the excise penalty provisions were held unsustainable at the prima facie stage where the applicants were only dealers in raw materials, not registered dealers of the finished goods, and no offence was shown in relation to their raw material dealings. The partner/director penalty also could not be sustained because there was no finding that the goods concerned were liable to confiscation. On these facts, the applicants established a prima facie case for complete waiver of pre-deposit and stay of recovery pending the appeals.

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Issues: Whether the applicants had made out a prima facie case for complete waiver of pre-deposit and stay of recovery of penalties imposed under the excise penalty provisions.

Analysis: The applicants were not registered dealers of the finished goods, but only dealers of raw materials. No offence was alleged or established in relation to their dealings in raw materials. The penalty on the partners/directors was sought under the provision corresponding to persons dealing with goods liable to confiscation, yet no finding had been recorded that the goods with which they were concerned were liable to confiscation. On these facts, the imposed penalties were found to be unsustainable at the prima facie stage.

Conclusion: The applicants made out a prima facie case for complete waiver of pre-deposit of the penalties and for stay of recovery pending disposal of the appeals.

Final Conclusion: The stay applications were allowed and recovery of the penalties was kept in abeyance during the pendency of the appeals.

Ratio Decidendi: Penalties under the excise penalty provisions cannot be sustained at the interim stage against persons who were not shown to be registered dealers of the finished goods and, for the partner or director penalty, absent a finding that the goods dealt with were liable to confiscation.

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