Pre-deposit waiver on estimated clandestine removal demand where substantiated duty was already paid and remaining liability lacked corroboration.

A pre-deposit waiver was justified where the duty attributable to stock shortage and seized documents had already been paid, and the balance demand rested only on an assumed production and power-consumption norm. The estimation method was treated as unsound because it assumed the clandestinely cleared quantity was manufactured in the same months, without any actual consumption experiment, corroborative evidence of unaccounted raw material purchase, or independent proof of clandestine removal for the remaining demand. The paid amount was therefore treated as sufficient for hearing the appeals, and recovery of the disputed balance was stayed.

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Issues: Whether, for the purposes of hearing the appeals, the appellants were required to pre-deposit the balance duty, interest and penalty when the duty already paid covered the demand supported by seized documents and stock shortage, and the remaining demand rested on an -consumption-based estimation.

Analysis: The duty attributable to stock shortage and the seized documents, quantified at Rs. 1,40,93,563/-, had already been paid. The remaining demand was worked out by assuming that the clandestinely-cleared quantity represented production in the same months and by deriving a power-consumption norm from that assumption. That method was found unsound because the alleged clearances need not have been manufactured in those months, no experiment had been conducted to ascertain actual power consumption, and there was no supporting evidence of unaccounted raw material purchase or independent proof of clandestine removal for the balance demand.

Conclusion: The amount already paid was held sufficient for hearing the appeals, and pre-deposit of the balance duty, interest and penalty was waived with recovery stayed.

Ratio Decidendi: A demand based on an assumed production norm derived from presumed clandestine clearances, without independent proof of actual power consumption or corroborative evidence of unaccounted manufacture, does not justify insisting on pre-deposit of the remaining disputed amount when the substantiated demand has already been paid.

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