Pre-deposit waiver for common input credit and exempt clearances granted where separate accounts were impracticable and reversal was made.

Pre-deposit of the balance demand, interest and penalty was waived and recovery stayed pending appeal because the appellant showed a prima facie case on input credit apportionment. Its manufacturing process yielded soap stock and acid oil as inevitable by-products, while exempt and dutiable clearances arose from common inputs, making separate inventory and account maintenance impracticable. The tribunal applied the principle that the law does not require an impossible act and noted that proportionate credit attributable to exempt clearances had already been reversed. The retrospective insertion of the relevant rule on proportionate reversal further supported the appellant, and insisting on deposit was treated as causing undue hardship.

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Issues: Whether, in the facts of the case, the requirement of pre-deposit of the balance demand, interest and penalty should be waived and recovery stayed pending disposal of the appeal.

Analysis: The appellant's manufacturing process produced soap stock and acid oil as inevitable by-products while exempt final products also emerged from the same common inputs. On the facts, separate maintenance of inventory and accounts for inputs used in dutiable and exempt clearances was found to be impracticable. The principle that the law does not compel performance of an impossible act was applied. It was also noted that the proportionate credit attributable to the exempt clearances had already been reversed, and that the retrospective insertion of the relevant rule supporting proportionate reversal reinforced the appellant's case. In these circumstances, the appellant was held to have established a prima facie case and the balance pre-deposit was found to cause undue hardship.

Conclusion: The requirement of pre-deposit of the balance demand, interest and penalty was waived and recovery was stayed till disposal of the appeal.

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