Pre-deposit waiver in duty valuation dispute accepted on prima facie merit, revenue neutrality, and prior duty payment.

Pre-deposit of the balance duty and penalties was waived where the challenge raised prima facie merit on valuation of captive clearances and the applicability of penalty provisions. The demand largely concerned a scheduled bulk drug with a price fixed by the drug control authorities, and the applicants also relied on revenue neutrality through available Modvat credit to recipient factories. Prior payment of the admitted differential duty before the show-cause notices further supported the interim relief. These factors were treated as sufficient to justify waiver pending appeal.

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Issues: Whether pre-deposit of the remaining duty and penalties should be waived pending appeal in view of the prima facie merits, the valuation dispute for captive clearances, and the plea of revenue neutrality.

Analysis: The demand substantially related to one bulk drug that was stated to be a scheduled bulk drug with a price fixed by the drug control authorities. The applicants also relied on the contention that duty already paid would be available as Modvat credit to the recipient factories and that the admitted differential duty had been paid before issuance of the show cause notices. These factors were treated as raising prima facie merit in the challenge, including a substantial question on valuation and the applicability of the penalty provision.

Conclusion: The pre-deposit of the balance duty and the penalties was waived.

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