Pre-deposit waiver on duty dispute: weak prima facie case denied full relief, but financial hardship secured partial protection.

A request for complete waiver of pre-deposit under Section 35F was assessed against both the merits of the duty dispute and the applicants' financial hardship. The demand had been challenged on limitation and on the duty liability for MEG used in manufacturing MMSF, but the record showed prior departmental notice on the prescribed set-off procedure and an order view that no set-off was available for quantities exported without duty under the cited exemption notification. That weak prima facie case justified denial of total dispensation. However, the applicants' sick-unit status and supporting material warranted partial relief, so a part pre-deposit of duty was directed while the entire penalty remained stayed.

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Issues: Whether the applicants had made out a case for complete waiver of pre-deposit of duty and penalty under Section 35F.

Analysis: The demand was challenged on limitation and on the merits of the duty liability on MEG used in the manufacture of MMSF. The record indicated that the department had earlier drawn the applicants' attention to the prescribed set-off procedure, and the impugned order also recorded a view that no set-off was available on the quantity exported without payment of duty under Notification No. 225/86-C.E. dated 03-04-1986 as amended. In these circumstances, the matter did not present a strong prima facie case for total dispensation. At the same time, the applicants' financial position, including the sick-unit status and the material placed before the Tribunal, justified some relief against immediate deposit.

Conclusion: Complete waiver of pre-deposit was not granted; a partial pre-deposit of duty was directed and the entire penalty was stayed.

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