Prima facie valuation dispute and limitation can justify waiver of pre-deposit and stay of recovery in a job-work case.

Waiver of pre-deposit and stay of recovery may be granted where the applicant shows a strong prima facie case on valuation and limitation. In a job-worker valuation dispute over soaps, the assessable value was computed on cost of manufacture and profit without adding duty paid on inputs on which Modvat credit had been taken. The Tribunal found the cited valuation precedent prima facie favourable to the applicant and held that the show cause notice did not disclose the factual basis required to invoke the extended period. As the department had knowledge of the valuation method and no prima facie suppression or misstatement was shown, deposit was waived and recovery stayed.

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Issues: Whether the applicant was entitled to waiver of pre-deposit of duty and penalty and stay of recovery pending appeal, having regard to the prima facie merits of the valuation dispute and the plea of limitation.

Analysis: The dispute involved valuation of soaps manufactured as a job worker, where the assessable value was computed on cost of manufacture and profit without including duty paid on inputs on which Modvat credit had been taken. The Tribunal noted that the cited precedent on valuation was prima facie favourable to the applicant. On limitation, it found a strong prima facie case because the notice did not set out the factual basis necessary for invoking the extended period, the department had knowledge of the method of valuation through the Chartered Accountant's certificate and the notice itself, and no prima facie suppression or misstatement was shown.

Conclusion: Waiver of deposit and stay of recovery were granted in favour of the applicant.

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