Input duty valuation dispute led to waiver of pre-deposit and stay of recovery on a strong prima facie case.

Duty paid on inputs was considered in relation to valuation of the final product for pre-deposit and stay purposes. The order recorded a prima facie view that Mysore Paper Mills did not apply on the facts, while the larger bench ruling in Dai Ichi Karkaria, as followed in later Tribunal decisions, appeared to govern the valuation dispute. On that basis, the applicants were found to have established a strong prima facie case for interim relief. Pre-deposit of duty and penalty was waived and recovery was stayed.

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Issues: Whether the duty element paid on inputs was required to be included in the valuation of the final product for the purpose of pre-deposit and stay.

Analysis: The order recorded a prima facie view that the decision of the Supreme Court in Mysore Paper Mills was not applicable on the facts, while the larger bench ruling in Dai Ichi Karkaria, as followed in later Tribunal decisions, appeared applicable to the valuation dispute. On that basis, the applicants were held to have made out a strong prima facie case for interim relief.

Outcome: Pre-deposit of the duty and penalty was waived and recovery thereof was stayed.

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