Partial pre-deposit waiver turns on prima facie defence, natural justice objections, and valuation methodology in duty disputes.

Partial waiver of pre-deposit in a duty and penalty dispute was considered on the basis of the appellant's prima facie defence, the natural justice plea, and the valuation method adopted by the department. Records showing outside purchases did not by themselves displace the department's case that the goods may have been manufactured by the appellant, while the claim of no machinery required final hearing. The cross-examination objection did not disclose a prima facie denial of natural justice, and the appellant's alternative valuation method was not accepted merely because it was more favourable. Only partial waiver was therefore justified, subject to deposit of Rs. 25 lakhs.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the demanded duty and penalty pending final hearing, in the light of the prima facie defence and the plea of natural justice.

Analysis: The appellant's records and invoices showed that some of the goods were purchased from outside, but that circumstance did not by itself displace the department's prima facie case that the goods may have been manufactured by the appellant. The contention that the appellant had no machinery or equipment to manufacture the goods required examination at the final hearing. On the grievance regarding denial of cross-examination, the record did not disclose a prima facie failure of natural justice. The method adopted for valuation appeared arbitrary, but an equally arbitrary valuation method suggested by the appellant could not be accepted merely because it was advantageous to it. In these circumstances, only partial waiver was warranted.

Conclusion: Waiver of pre-deposit was granted only in part, subject to deposit of Rs. 25 lakhs towards duty within three months, and the balance of duty and penalty was waived pending appeal.

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