Prima facie doubt over computer data evidence justified pre-deposit waiver and stay of recovery in a fiscal demand dispute.

In a stay application before CESTAT, the tribunal found a prima facie case for waiver of balance pre-deposit where the duty demand was largely based on reconstructed computer data and the admissibility of the printouts was seriously questioned under the statutory conditions for electronic evidence. It also noted material disputes on alleged raw material receipt, cash flow, production capacity and the absence of corresponding cash seizure, while considering the financial hardship already demonstrated by amounts deposited during investigation. On that basis, recovery was stayed and the balance duty and penalties were waived pending disposal of the appeals.

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Issues: Whether, in the stay applications arising from the duty demand and penalties, the appellants had made out a prima facie case for waiver of the balance pre-deposit and stay of recovery.

Analysis: The demand was substantially founded on reconstructed or retrieved computer data. The admissibility of such material was challenged with reference to the statutory conditions governing computer printouts, and the objection was found prima facie substantial. The order also noted that the demand appeared to be multiplied, that no adequate evidence was shown regarding receipt of the large quantities of raw material, cash flow, or production capacity required for the alleged turnover, and that no seizure of corresponding cash was made. Financial hardship was also considered, including the amounts already deposited during investigation. These factors justified examination at the regular hearing rather than at the interim stage.

Conclusion: The balance duty and penalties were waived for the interim stage and recovery was stayed pending disposal of the appeals.

Ratio Decidendi: Where a very large fiscal demand is primarily based on reconstructed computer data whose admissibility is prima facie doubtful, and the assessee shows financial hardship and other serious factual disputes, waiver of pre-deposit and stay of recovery are justified pending final hearing.

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