Deemed credit and limitation defence supported waiver of pre-deposit and stay of recovery pending appeal.

Waiver of pre-deposit was justified because the appellant showed a strong prima facie case on deemed credit, where production of duty-paying documents had been dispensed with, and the adjudication order had gone beyond the grounds in the show cause notice. A prima facie limitation defence also existed, as the notice was issued beyond six months from the relevant date and no suppression of material facts was shown to support the extended period. The department's objection that credit was wrongly allowed for want of purchase documents was found prima facie untenable since receipt of the inputs was not disputed. Recovery of duty and penalty was stayed pending appeal.

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

Analysis: The applicants made out a strong prima facie case that the deemed credit order dispensed with production of duty-paying documents and that the adjudication order had gone beyond the grounds stated in the show cause notice. The applicants also showed a prima facie limitation defence, since the notice was issued beyond six months from the relevant date and no suppression of material facts was evident for invoking the extended period. The departmental objection that credit was wrongly allowed for want of purchase documents was also found prima facie untenable because receipt of the inputs was not disputed.

Conclusion: Waiver of pre-deposit was granted and recovery of duty and penalty was stayed pending the appeal, in favour of the appellant.

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