Prima facie fraud and no financial hardship justified partial pre-deposit with waiver of the remaining demand and penalties.

Interim relief in the form of waiver of the balance pre-deposit was declined because the material from investigation showed a strong prima facie case of fraudulent Cenvat credit availment on paper invoices and clandestine removal of finished goods without duty payment. Statements, records and recovered slips were treated as sufficient to show that the balance of convenience favoured the Revenue, and no financial hardship was demonstrated. Partial pre-deposit was therefore directed, with the balance duty, penalty and co-noticee penalties waived and recovery stayed only upon compliance with the deposit condition.

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Issues: Whether the appellants were required to make a partial pre-deposit and obtain waiver of the remaining demand and penalties.

Analysis: On the materials gathered in investigation, the Tribunal found a strong prima facie case of fraudulent availment of Cenvat credit on the basis of paper invoices and clandestine removal of finished goods without duty payment. The evidence collected from statements, records and recovered slips was held sufficient to show that the balance of convenience lay with the Revenue at the interim stage, and no financial hardship was demonstrated.

Conclusion: The appellants were directed to deposit Rs. 75 lakhs within twelve weeks, and on such deposit the remaining duty, penalty and co-noticee penalties were waived and recovery stayed till disposal of the appeals.

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