Prima facie evidence of clandestine manufacture justified substantial pre-deposit and denial of complete waiver at the stay stage.

At the stay stage, a strong prima facie case of clandestine manufacture and clearance of pan masala can justify denial of complete waiver of pre-deposit. The Tribunal treated departmental material, including unretracted statements recorded under section 14 of the Central Excise Act, 1944, as having evidentiary value for interim purposes, and noted that duty liability under Rule 18 of the Pan Masala Packing Machines Rules, 2008 may arise where packing machines are installed in the factory premises, even if their operational status is disputed. In view of revenue interest, substantial deposit was directed and full waiver was declined.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the duty and penalty demanded, and whether a partial deposit should be directed on the basis of the prima facie case disclosed by the record.

Analysis: The Tribunal noted the departmental material indicating clandestine manufacture and clearance of pan masala using installed packing machines, including statements of the concerned persons and corroborative circumstances recorded by the adjudicating authority. It further observed that, under Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, duty liability could arise where packing machines were installed in the factory premises, even if the assessee disputed their operational status. The Tribunal also accepted, at the stay stage, the evidentiary value of the statements recorded under Section 14 of the Central Excise Act, 1944, as they had not been retracted. In view of the prima facie case and revenue interest, complete waiver was not justified.

Conclusion: The application for full waiver was rejected in part, and the appellant was directed to deposit 50% of the duty confirmed after taking into account the amount already deposited; on compliance, the balance dues were waived and recovery stayed during the pendency of the appeal.

Ratio Decidendi: At the stage of stay and waiver of pre-deposit, a strong prima facie case based on evidence of clandestine manufacture and unretracted statements can justify directing substantial deposit and limiting waiver rather than granting complete relief.

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