Pre-deposit waiver in tariff classification dispute granted for duty, with partial deposit directed toward penalty.

A strong prima facie case justified waiver of pre-deposit of the confirmed duty because the dispute arose from incorrect tariff classification in the Modvat declaration and maintenance of a single register, and no revenue loss was shown. However, irregularities in record maintenance supported a partial safeguard on the penalty side, so a deposit was directed towards penalty while recovery of the balance was stayed on compliance.

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Issues: Whether pre-deposit of the confirmed duty should be waived, and whether any amount should be directed to be deposited towards the penalty pending disposal of the appeal.

Analysis: The applicants showed a strong prima facie case because the dispute arose from incorrect tariff classification in the Modvat declaration and the maintenance of a single register, while the department had not suffered any revenue loss. The order also noted substantial irregularities in the manner of record maintenance, which justified insisting on a part deposit towards penalty. In these circumstances, full pre-deposit of the duty demand was not warranted, but partial safeguard of the penalty amount was considered appropriate.

Conclusion: Pre-deposit of the duty confirmed was waived, while deposit of Rs. 3 lakhs towards penalty was directed, with the balance recovery stayed on compliance.

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