Interim stay in disputed excise matter continued subject to bank guarantee to protect Revenue interests.

Where alleged non-compliance with Notification No. 22/2003-C.E. concerning removal of defective goods without duty is in dispute and the factual position is not clear, interim protection need not be vacated outright. The Court held that unconditional continuation of the stay was not appropriate, and balanced the assessee's interest against the Revenue's interest by making the interim relief conditional on furnishing an unconditional bank guarantee. The effect was to preserve stay protection pending the appeal while securing the Revenue through financial security.

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Issues: Whether the Tribunal's interim stay order should be set aside or continued only on conditions, and whether the respondent should be directed to furnish security by way of bank guarantee pending disposal of the appeal.

Analysis: The dispute arose out of alleged contravention of the conditions attached to Notification No. 22/2003-C.E. dated 31-3-2003 in relation to removal of defective goods without payment of duty. The Court noted that the controversy on facts was not free from doubt, particularly on whether the goods were actually returned to the manufacturer. In that situation, the Tribunal's stay order was not liable to be vacated outright, but the unconditional continuation of stay was considered inappropriate. To balance the competing interests of the assessee and the Revenue, the Court directed furnishing of an unconditional bank guarantee as a condition for continuation of the interim protection.

Conclusion: The appeal was not accepted to the extent of seeking complete vacation of the stay, but the interim protection was made conditional on furnishing bank guarantee.

Final Conclusion: The assessee retained interim relief, subject to security being furnished to safeguard the Revenue, and the appeal was finally disposed of on that basis.

Ratio Decidendi: Where a disputed fiscal liability is under challenge and the facts are contentious, interim protection may be continued on terms that secure the Revenue's interest rather than being vacated outright.

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