Pre-deposit waiver in excise appeal turned on an arguable issue over in-factory consumption of nitrogen gas.

Whether purging of outside tankers within the factory constituted consumption of nitrogen gas within the factory was treated as an arguable issue for appeal-stage consideration. The material on record did not establish a prima facie case for complete waiver of pre-deposit, so total relief was declined. Partial relief was nevertheless considered appropriate to secure the hearing of the appeal, and waiver of the balance was granted subject to a limited deposit, with stay of recovery during the pendency of the appeal.

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Issues: Whether the applicants were entitled to total waiver of pre-deposit and stay of recovery in respect of the duty demand and penalty.

Analysis: The question whether purging of outside tankers within the factory amounted to consumption of nitrogen gas within the factory was treated as an arguable matter for consideration at the appeal stage. On the material placed, a prima facie case for complete waiver was not made out, but partial relief was considered appropriate for the purpose of hearing the appeal.

Outcome: Partial waiver of pre-deposit was granted by directing deposit of Rs. 2 lakhs towards duty and Rs. 25,000 towards penalty, with waiver of the balance and stay of recovery during pendency of the appeal.

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