Capacity-based duty under retail sale price slabs supported interim relief and stay of recovery on a prima facie arguable interpretation.

The Rules link duty liability to production capacity by reference to retail sale price slabs under Rule 5. On a prima facie view, the first proviso to Rule 8 was treated as applying where a manufacturer began a new retail sale price during the month and where different retail sale prices fell in different slabs. The same proviso was also viewed as having a punitive effect if used to count the same machine twice for two retail sale prices in the same slab. On that basis, the appellants made out an arguable case for interim relief, and waiver of pre-deposit with stay of recovery was granted during the appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery pending appeal on the question whether the first proviso to Rule 8 applied only where pan masala of different retail sale prices fell in different slabs under Rule 5 and whether manufacture of two retail sale prices on the same machine in the same slab justified counting the machine twice.

Analysis: The Rules provide for determination of duty liability on the basis of capacity of production linked to the retail sale price slabs in the table under Rule 5. On a prima facie view, the first proviso to Rule 8 appeared to apply where the manufacturer commenced production of a new retail sale price during the month and where different retail sale prices fell under different slabs. The same provision was also viewed as punitive in effect when applied to the same machine used for more than one retail sale price. In these circumstances, the appellants showed a sufficiently arguable case for interim relief.

Conclusion: Waiver of pre-deposit was granted and recovery of the disputed dues was stayed during pendency of the appeal.

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