Prima facie misapplication of duty-free imports led to partial pre-deposit, while partner penalty was waived at the interim stage.

In stay proceedings under a duty-free import scheme, the Tribunal found a prima facie case that imported zinc had been misapplied against the export obligation because the exported goods were unrelated to the declared product and sample analysis showed no zinc oxide. On that interim assessment, complete waiver of duty demand and penalties was refused, and only a partial pre-deposit was directed. The separate penalty on the partner was waived at the interim stage.

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Issues: Whether, in the stay proceedings, the appellants had made out a case for complete waiver of the duty demand and penalties, and whether penalty on the partner could be sustained at the interim stage.

Analysis: The goods exported against the duty-free import scheme were found, on the material placed before the Tribunal, to be unrelated to the declared export product, and the sample analysis indicated absence of zinc oxide. On that basis, the Tribunal formed a prima facie view that the imported zinc had been misapplied against the export obligation. However, considering the nature of the proceedings, only partial pre-deposit was directed.

Conclusion: The appellants were directed to deposit the entire duty demand and part of the penalty, while the separate penalty on the partner was waived at the interim stage.

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