Prima facie penalty challenge under Customs law supported waiver of pre-deposit and stay of recovery pending appeal.

Penalty under Section 114(iii) of the Customs Act could not be sustained merely on the basis of a notice proposing recovery of drawback under Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995. The record did not disclose a clear and specific allegation that the appellants had abetted an offence making the export goods liable to confiscation, nor that such abetment had been properly put to notice with sufficient particulars. As the appellants' role required deeper examination on evidence, a prima facie case was made out for interim relief and the balance of convenience favoured protection against recovery of the penalties pending final disposal.

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Issues: Whether the appellants were entitled to complete waiver of pre-deposit and stay of recovery of the penalties imposed under Section 114(iii) of the Customs Act, 1962.

Analysis: The notice primarily proposed recovery of drawback and referred to Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995, which concerns recovery of erroneously granted drawback. On the face of the record, penalty could not be sustained by invoking Rule 16 alone. The record did not disclose a clear and specific allegation, in the notice or in the adjudication order, that the appellants had abetted an offence rendering export goods liable for confiscation, nor did it show that the charge of abetment had been properly put to notice with sufficient particulars. The order also indicated that the alleged role of the appellants required deeper examination on the evidence before final adjudication. In these circumstances, a prima facie case was made out against the penalties and the balance of convenience justified interim protection.

Conclusion: The appellants were entitled to complete waiver of pre-deposit and stay of recovery of the penalties till final disposal of the appeals.

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