Prima facie objection to penalty supported interim relief, but serious suppression material justified only conditional waiver of duty demand.

A prima facie objection to penalty under Section 11AC was accepted because the disputed period preceded the provision's commencement, so interim protection against penalty was warranted. Complete waiver of the duty demand was refused because private records and departmental material disclosed a serious dispute on suppressed production, and the appellant's financial and production-based challenge was insufficient to justify full relief. Conditional interim relief was therefore granted through a directed pre-deposit, with waiver of the balance duty and penalty on compliance.

---

---

Issues: (i) Whether the appellant had made out a prima facie case for waiver of penalty under Section 11AC for the disputed period; (ii) whether the appellant had made out a sufficient case for complete waiver of the duty demand at the interim stage.

Issue (i): Whether the appellant had made out a prima facie case for waiver of penalty under Section 11AC for the disputed period.

Analysis: The disputed period was prior to the commencement of Section 11AC, and the material placed indicated that the appellant had a prima facie objection to the levy of penalty under that provision.

Conclusion: Prima facie, the appellant was entitled to relief against penalty.

Issue (ii): Whether the appellant had made out a sufficient case for complete waiver of the duty demand at the interim stage.

Analysis: The existence of private records and the material collected by the Department showed a serious dispute regarding suppressed production. The appellant's financial material and production-based challenge were found insufficient to justify full waiver, though partial protection was considered appropriate.

Conclusion: Complete waiver of the duty demand was declined and a conditional pre-deposit was directed.

Final Conclusion: Interim relief was granted only to a limited extent by directing a pre-deposit of Rs. 4 lakhs and granting waiver of the balance duty and penalty on compliance.

Ratio Decidendi: A prima facie objection to penalty can justify interim protection, but full waiver of duty will not be granted where the departmental material shows a serious case on suppression and the appellant fails to establish strong grounds for complete relief.

---