Prima facie case can justify waiver of pre-deposit and stay of recovery in customs duty disputes

A strong prima facie case against a further duty demand can justify waiver of pre-deposit and stay of recovery pending appeal. The dispute concerned imported electric bicycles in CKD condition, on which duty had already been paid at import. The applicants argued that subsequent assembly did not amount to manufacture attracting duty under Notification No. 6/2006-C.E. dated 1-3-2006. On that basis, pre-deposit of the dues was waived and recovery was stayed during the pendency of the appeal.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery during the pendency of the appeal.

Analysis: The imported goods were declared as electric bicycles in CKD condition and duty was paid at the time of import. On a prima facie view, the applicants showed a strong case against the further demand raised on the footing that assembly of the goods amounted to manufacture and attracted duty under Notification No. 6/2006-C.E. dated 1-3-2006.

Conclusion: Pre-deposit of the dues was waived and recovery was stayed during the pendency of the appeal.

Ratio Decidendi: Where the assessee establishes a strong prima facie case against the duty demand, pre-deposit can be waived and recovery stayed pending appeal.

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