Pre-deposit and differential duty turn on factory existence, removal of goods, and saved liabilities under amended law.

Pre-deposit was not insisted upon for the demand relating to inputs and capital goods lying in stock, because the factory was held to remain in legal existence despite cessation of production and duty liability arose only on removal. For goods already cleared, the differential duty was computed with reference to the law in force on the date of clearance, and the amended provisions did not affect accrued rights or liabilities under the earlier regime. On that basis, no prima facie case was made out to waive pre-deposit on the recomputed differential duty, while relief was confined to the stock-in-hand component.

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Issues: (i) Whether pre-deposit could be insisted upon for the demand relating to inputs and capital goods lying in stock in a factory which was held to be in legal existence though not in active production. (ii) Whether, for goods already removed, the differential duty had to be recalculated with reference to the law in force on the date of clearance, including the saving of accrued rights and liabilities after amendment.

Issue (i): Whether pre-deposit could be insisted upon for the demand relating to inputs and capital goods lying in stock in a factory which was held to be in legal existence though not in active production.

Analysis: The earlier order had already recorded that the factory continued to exist in law despite cessation of manufacture. On that footing, duty liability in respect of inputs and capital goods still lying in the premises was not exigible at that stage, since liability would arise only on removal and not merely because manufacturing had stopped.

Conclusion: The demand relating to goods lying in stock was not to be enforced by way of pre-deposit at this stage.

Issue (ii): Whether, for goods already removed, the differential duty had to be recalculated with reference to the law in force on the date of clearance, including the saving of accrued rights and liabilities after amendment.

Analysis: The amended provisions were held not to disturb rights accrued and liabilities incurred under the earlier regime. The phrase requiring calculation in accordance with the law prevailing on the date of clearance was read as referring to the provisions actually in force on those dates. On that basis, the Commissioner's recalculation of the differential duty did not disclose any prima facie infirmity.

Conclusion: No prima facie case was made out for waiver of pre-deposit on the differential duty already worked out on removal.

Final Conclusion: Relief was granted only to the limited extent of pre-deposit on one component of the demand, while the balance demand was kept in abeyance on deposit of the directed amount.

Ratio Decidendi: In a stay application, pre-deposit may be waived where no immediate duty liability is shown on stock lying in a factory still in legal existence, but differential duty on cleared goods can be sustained where the saved pre-amendment provisions govern the computation.

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