Pre-deposit waiver denied where nil-duty silk fabric did not satisfy the duty-paid condition and disclosure was unsubstantiated.

A claim for full waiver of pre-deposit was rejected where duty-free or nil-duty silk fabric was treated as not satisfying the requirement of duty paid at the appropriate rate under Notification No. 15/2002-C.E. The asserted bona fide belief was not accepted because the legal position was already settled that nil duty is not equivalent to appropriate duty. The alleged disclosure to the Department also failed for lack of supporting material beyond the registration form, with no monthly returns or similar evidence produced. A conditional pre-deposit was therefore required before the appeal could proceed.

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Issues: Whether waiver of pre-deposit in respect of duty and penalty was justified in view of the claim of bona fide belief regarding duty-paid nature of silk fabric and the plea of disclosure to the Department.

Analysis: The exemption under Notification No. 15/2002-C.E. required that the fabric used in readymade garments be duty paid at the appropriate rate. The law had already been settled by the Supreme Court that nil duty does not amount to payment of appropriate duty. The appellants' reliance on bona fide belief was therefore not acceptable. As to disclosure, no supporting material beyond the registration form, such as monthly returns or similar evidence, was produced to substantiate the claim that the use of non-duty paid silk fabric had been fully disclosed to the Department. In these circumstances, a conditional pre-deposit was considered necessary before the appeal could be heard.

Conclusion: The request for complete waiver was rejected and the appellants were directed to pre-deposit 25% of the duty amount within six weeks, with the balance of duty and penalty waived subject to compliance during the pendency of the appeal.

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