Prima facie challenge to duty demand under Rule 57CC justified unconditional waiver of pre-deposit for duty and penalty.

Unconditional waiver of pre-deposit of duty and penalty was granted where the applicants raised a strong prima facie challenge to a duty demand under Rule 57CC of the Central Excise Rules. The demand on pressmud and baggasse was treated as prima facie contrary to the rule, and that showing was sufficient to decline insistence on deposit of the full amounts. Because the penalty was consequential to the disputed duty demand, the prima facie case also extended to the penalty, and pre-deposit was waived for both.

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Issues: Whether the applicants were entitled to unconditional waiver of pre-deposit of duty and penalty in view of their prima facie challenge to the demand raised under Rule 57CC of the Central Excise Rules.

Analysis: The demand of duty on pressmud and baggasse was challenged as being contrary to Rule 57CC. The Tribunal found the contention prima facie correct, noting that the applicants had established a strong prima facie case against the duty demand. Since the penalty was consequential to the duty demand, a strong prima facie case was also made out against the penalty. In these circumstances, the request for insisting upon deposit of the full amounts was not accepted.

Conclusion: The applicants were held entitled to unconditional waiver of pre-deposit of duty and penalty.

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