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Issues: (i) Whether the appellant should be directed to make pre-deposit of duty and penalty pending appeal. (ii) Whether pre-deposit of penalty under Section 11AC and the penalties imposed on the directors should be waived.
Issue (i): Whether the appellant should be directed to make pre-deposit of duty and penalty pending appeal.
Analysis: The appeal arose from a demand based on alleged clandestine removal supported by registers and statements. The matter was found to be arguable, and the financial position reflected in the balance sheet was also taken into account while balancing the equities pending final hearing.
Conclusion: The appellant was directed to pre-deposit Rs. 12 lakhs towards duty and Rs. 1 lakh towards penalty under Rule 173Q, with stay of recovery of the balance on compliance.
Issue (ii): Whether pre-deposit of penalty under Section 11AC and the penalties imposed on the directors should be waived.
Analysis: Prima facie acceptance was given to the contention that penalty under Section 11AC was not attracted because the period in dispute preceded the introduction of that provision. The separate requirement of pre-deposit of the penalties imposed on the directors was also considered unnecessary at the interim stage.
Conclusion: Pre-deposit of penalty under Section 11AC and the directors' penalties was waived, and recovery thereof was stayed pending appeal.
Final Conclusion: Interim relief was granted in part, subject to limited pre-deposit of duty and Rule 173Q penalty, while the Section 11AC penalty and directors' penalties were stayed.
Ratio Decidendi: In deciding interim relief in a tax appeal, the Tribunal may require limited pre-deposit where the appeal is arguable, while waiving pre-deposit of a penalty provision not applicable to the relevant period and granting stay of recovery pending appeal.
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