Pre-deposit waiver in duty dispute granted partly on prima facie merits and financial capacity, with recovery stayed.

In a stay application arising from a duty demand, the Tribunal applied the twin tests of prima facie merit and financial capacity to decide whether pre-deposit relief should be granted. It found no strong prima facie case because the applicability of Explanation VII to Notification No. 1/93 depended on whether the relevant manufacture occurred in the same factory, a matter reserved for final hearing. On financial capacity, the Tribunal relied on the assessee's substantial reserves and held that the balance of convenience justified only a limited deposit. Partial waiver of pre-deposit was therefore granted, with stay of recovery on payment of the directed amount.

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Issues: Whether, in a stay application arising from a duty demand, the appellant was entitled to partial waiver of pre-deposit and stay of recovery pending final hearing.

Analysis: The application was examined on the twin considerations of prima facie merit and financial capacity. The Tribunal found that the assessee did not establish a strong prima facie case, particularly as the applicability of Explanation VII to Notification No. 1/93 depended on whether the relevant manufacture occurred in the same factory, an issue left for final hearing. On financial capacity, the Tribunal noted the existence of substantial reserves and held that the balance of convenience justified directing only a limited deposit while protecting the remainder of the demand.

Conclusion: Partial waiver of pre-deposit was granted. The appellant was directed to deposit Rs. 2.5 lakhs and, upon such payment, was granted waiver of the remaining deposit and stay of recovery.

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