Interim relief on Rule 27 penalties granted after strong prima facie case and dropped CENVAT credit demand.

Penalties imposed under Rule 27 of the Central Excise Rules, 1944 were subject to interim relief because the rule carries a maximum penalty of Rs. 5,000 and the applicants showed a strong prima facie case. The main demand relating to denial of CENVAT credit and refund of export benefits had already been dropped by the adjudicating authority after review of the evidence. On that basis, pre-deposit of the penalties was waived and recovery was stayed during pendency of the appeals.

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Issues: Whether pre-deposit of the penalties imposed under Rule 27 of the Central Excise Rules, 1944 was to be waived and recovery stayed during pendency of the appeals.

Analysis: The penalties were imposed under Rule 27, which provides for a maximum penalty of Rs. 5,000. The main demand relating to denial of CENVAT credit and refund of export benefits had already been dropped by the adjudicating authority after consideration of the evidence on record. On that basis, the applicants were found to have a strong prima facie case for interim relief.

Conclusion: Pre-deposit of the penalties was waived and recovery was stayed during pendency of the appeals.

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