Pre-deposit waiver for penalty where SSI clubbing and duty-demand issues remained pending, with recovery stayed during appeal.

Pre-deposit of penalty was waived and recovery stayed pending disposal of the appeals where the penalty rested on an unresolved allegation that clearances of units had to be clubbed for SSI exemption purposes, leading to alleged removal of excisable goods without duty and without Central Excise compliance. Because the foundational show cause notice on clubbing and duty demand was still awaiting adjudication, the penalty proceedings were treated as premature for interim enforcement. Substantial payment made during investigation also supported interim protection.

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Issues: Whether the requirement of pre-deposit of penalty and recovery thereof should be waived pending adjudication of the main show cause notice.

Analysis: The penalty had been imposed on the footing that the clearances of the units were liable to be clubbed for deciding eligibility to SSI exemption and, on that basis, that excisable goods had been removed without payment of duty and without observing Central Excise formalities. The main show cause notice on the clubbing and duty-demand issue was still pending adjudication, and the impugned penalty proceedings had been concluded before that foundational issue was finally determined. The record also showed substantial payment made during investigation, which supported a case for interim protection.

Conclusion: The requirement of pre-deposit of penalty was waived and recovery was stayed during pendency of the appeals.

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