Pre-deposit waiver in clandestine clearance dispute limited to partial relief; balance deposit ordered and recovery stayed on compliance.

Entitlement to complete waiver of pre-deposit was rejected because the demand and penalties arose from allegations of clandestine manufacture and clearance of pan masala, and the departmental material made the merits debatable only at the interim stage. The appellants were held not to have established a strong prima facie case for full waiver. Partial relief was granted by directing deposit of a reduced amount toward the duty demand, while waiving the balance and staying recovery of the remaining duty and penalty on compliance.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery pending appeal.

Analysis: The demand and penalties arose from allegations of clandestine manufacture and clearance of pan masala. The record contained statements and other material relied upon by the department, and the merits were found to be debatable at the stage of pre-deposit. As a result, the appellants were held not to have made out a strong prima facie case for complete waiver. Partial relief was nevertheless granted by directing deposit of a reduced amount toward the duty demand, while waiving the balance and staying recovery of the remaining duty and penalty on compliance.

Conclusion: Waiver of pre-deposit was granted only in part, with a direction to deposit a limited amount and stay of recovery of the balance upon compliance.

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