Cenvat credit and clandestine removal claims: interim stay may be granted selectively where prima facie evidence is uneven.

Estimated input-output discrepancies, without evidence of unaccounted raw material purchases or actual clandestine removal, were held insufficient to justify complete denial of interim stay on a duty demand. The company was found to have a prima facie case on that issue, but the cenvat credit demand was not fit for total waiver because the assessee had admitted wrongful availment of substantial credit and questions of reversal and re-credit, as well as interest liability, required final examination. Pre-deposit of the personal penalty on the Divisional Manager was waived because the record then did not show prima facie knowledge that excisable goods were liable for confiscation. Partial pre-deposit was directed only for the company.

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Issues: (i) Whether the demand of duty based on alleged clandestine removal of finished goods, founded on estimated raw material consumption, warranted total waiver of pre-deposit; (ii) Whether the cenvat credit demand of Rs. 2,89,12,900/- called for complete waiver at the stay stage; (iii) Whether the personal penalty imposed on the Divisional Manager warranted waiver of pre-deposit.

Issue (i): Whether the demand of duty based on alleged clandestine removal of finished goods, founded on estimated raw material consumption, warranted total waiver of pre-deposit.

Analysis: The duty demand rested on an based on input-output calculations and comparison with book figures. There was no allegation or evidence of unaccounted purchase of raw materials and no evidence of clandestine removal of finished goods. The estimated discrepancy also did not account for wastage, and clandestine removal cannot be inferred merely from an input-output ratio.

Conclusion: The assessee made out a prima facie case and the demand did not justify complete denial of stay relief.

Issue (ii): Whether the cenvat credit demand of Rs. 2,89,12,900/- called for complete waiver at the stay stage.

Analysis: The assessee admitted that a substantial portion of the credit had been wrongly taken, though it claimed reversal. The competing claims on reversal and re-credit required examination at the final hearing, and the issue could not be treated as fit for total waiver at the interim stage. Interest liability also remained relevant.

Conclusion: Total waiver was declined and partial pre-deposit was directed.

Issue (iii): Whether the personal penalty imposed on the Divisional Manager warranted waiver of pre-deposit.

Analysis: On the materials then available, there was no prima facie evidence that he dealt with excisable goods knowing them to be liable for confiscation. The case for interim relief on the personal penalty was therefore stronger than against the company on the credit issue.

Conclusion: Pre-deposit of the personal penalty was waived and recovery stayed.

Final Conclusion: Interim relief was granted in part. The company was required to make a limited pre-deposit, with the balance of duty, credit, interest and penalty stayed, while the personal penalty appeal was protected by waiver of pre-deposit.

Ratio Decidendi: Allegations of clandestine removal cannot be sustained at the interim stage merely on estimated input-output discrepancies without supporting evidence, and stay relief may be granted selectively where the record discloses a prima facie case on one demand but not on another.

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