Stay of recovery granted where the foundational notice was prima facie void and the appellant showed an arguable case.

An interim stay of recovery may be granted where the foundational notice is prima facie without jurisdiction and the appellant shows an arguable case on merits. The Tribunal considered that a fresh show cause notice should have been issued before adjudication after the earlier notice had been treated as ab initio void. On that basis, it granted stay of recovery of duty and penalty, subject to an undertaking to maintain the prescribed balance in RG 23A pending disposal of the appeal.

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Issues: Whether the applicants were entitled to stay and waiver of recovery of the duty and penalty demanded, subject to an undertaking to maintain a balance in RG 23A.

Analysis: The application arose from a demand confirmed without a fresh show cause notice after the earlier notice had been treated as ab initio void and without jurisdiction. The Tribunal found prima facie that the Department ought to have issued a fresh notice before adjudication. It also considered that the applicants had an arguable case on merits, warranting protection pending disposal of the appeal.

Conclusion: Stay of recovery of both duty and penalty was granted on compliance with the undertaking to maintain the prescribed balance in RG 23A.

Final Conclusion: The applicants obtained interim protection against recovery pending appeal, while the demand itself was not finally decided.

Ratio Decidendi: Where the foundational notice is prima facie without jurisdiction and the appellant shows an arguable case, recovery may be stayed pending appeal on suitable conditions.

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