Area-based exemption and prima facie case justified waiver of balance pre-deposit and stay of recovery pending appeal.

An assessee claiming area-based exemption succeeded in showing a prima facie case for waiver of the balance pre-deposit and stay of recovery pending appeal. The dispute concerned alleged undervaluation of factory clearances to a depot and non-payment of duty on depot clearances, but the assessee had already deposited the disputed duty before the show cause notice and a substantial part of that amount had been refunded, leaving only a balance with the Revenue. On these facts, the matter was treated as one of interpretation, and pre-deposit was dispensed with while recovery was stayed until disposal of the appeal.

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Issues: Whether the assessee was entitled to waiver of pre-deposit and stay of recovery pending appeal in view of the area-based exemption notification and the surrounding facts.

Analysis: The demand arose from an allegation of undervaluation of goods cleared from the factory to the depot and non-payment of duty on depot clearances. The assessee was operating under an area-based exemption notification and had already deposited the disputed duty amount before issuance of the show cause notice. A substantial portion of the deposited amount had been refunded, leaving only a balance with the Revenue. The issue was treated as one of interpretation, and on the available record the assessee was found to have established a prima facie case for dispensing with pre-deposit.

Conclusion: The assessee was entitled to waiver of the balance pre-deposit and recovery was stayed until disposal of the appeal.

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