Pre-deposit waiver in excise stay proceedings granted on prima facie case, transferee liability, and financial hardship.

In a stay petition under Section 35F of the Central Excises and Salt Act, 1944, the Tribunal considered whether a transferee unit had shown a prima facie case for waiver of pre-deposit in relation to duty and penalty demands. The members assessed the transferee-liability objection for the earlier period, the plea of deemed Modvat credit, and the financial hardship claimed by the appellants. By majority, the Tribunal granted substantial interim protection, directed a limited pre-deposit of Rs. 5 lakhs, and stayed recovery of the balance during the appeal on compliance.

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Issues: Whether the appellants were entitled to partial waiver of pre-deposit in the stay proceedings and, if so, what amount should be deposited pending the appeal.

Analysis: The dispute concerned a stay petition under Section 35F of the Central Excises and Salt Act, 1944 arising from a demand of duty and penalty against a transferee unit. The members considered the prima facie case, the contention that liability for the earlier period could not be fastened on the transferee, the plea regarding deemed Modvat credit, and the financial hardship shown by the appellants. The majority view accepted that the appellants had made out a sufficient prima facie case for substantial protection during appeal and fixed a limited pre-deposit amount, while keeping the balance stayed during pendency of the appeal on compliance. A dissenting view required a much higher pre-deposit, but the majority view prevailed.

Conclusion: The appellants were granted partial waiver of pre-deposit and were directed to deposit Rs. 5 lakhs, with the balance of duty and penalty stayed during the appeal on compliance.

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