Pre-deposit waiver and Section 11AC penalty limits: duty deposit partly required, balance penalties waived at interim stage.

Incomplete documentary support for rebate-linked purchases and denials by alleged suppliers weighed against complete waiver of the duty pre-deposit, while the absence of pleaded financial hardship also supported insisting on deposit of the duty demand. Penalty under section 11AC was prima facie unsustainable where the alleged offence was stated to have occurred before that provision came into force, so only part of the penalty was required to be deposited and the balance was waived at the interim stage.

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Issues: Whether waiver of pre-deposit of the duty demand and penalties was justified, and whether penalty under section 11AC of the Central Excise Act could be sustained for conduct stated to have occurred before the provision came into force.

Analysis: The applications arose from a large duty demand on rebate claims and consequential penalties. On the material then available, the absence of documentary support for the alleged purchases and the denials by persons said to have supplied the goods weighed against complete waiver of the duty amount. At the same time, the alleged offence was stated to have occurred before the enactment of section 11AC, making the levy of penalty under that provision prima facie untenable. No financial hardship was pleaded to justify complete dispensation from the duty deposit.

Outcome: Deposit of the entire duty demand and a part of the penalty was directed, while deposit of the balance penalties was waived. The applications were thus only partly accepted at the interim stage.

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