Prima facie waiver of pre-deposit granted where balance-sheet discrepancies were explained and no evidence supported clandestine clearance.

Prima facie waiver of pre-deposit was justified where the duty demand rested only on a discrepancy between RG-1 figures and the balance sheet, and the balance sheet notes explained that the figures included captive consumption, sample issues and sub-contracted items. In the absence of any independent corroborative evidence of clandestine clearance, the discrepancy was treated as satisfactorily explained at the interim stage, and total waiver of pre-deposit with stay of recovery was granted pending appeal.

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Issues: Whether the applicant had made out a prima facie case for waiver of pre-deposit of duty and penalty.

Analysis: The demand was founded solely on the difference between production figures shown in the RG-1 register and those reflected in the balance sheet. The balance sheet notes indicated that the figures included captive consumption, sample issues and sub-contracted items. The department did not produce any independent corroborative evidence to support the allegation of clandestine clearance. On the materials placed, the discrepancy was satisfactorily explained at the prima facie stage.

Conclusion: The applicant was entitled to total waiver of pre-deposit and stay of recovery during the pendency of the appeal.

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