Prima facie waiver of pre-deposit granted where exemption claims and penalty on gold-bar manufacture remained arguable.

Gold bars produced by melting and casting gold powder were treated as giving rise to arguable duty and exemption disputes at the stay stage. The tribunal found a prima facie case for waiver of the remaining pre-deposit of duty and penalty because the demand and penalty were open to question on the facts noted. It also found the exemption claims under Notification No. 6/2000 and Notification No. 67/95 prima facie arguable, including the effect of Rule 6 compliance and whether post-clearance payment could relate back to the clearance. Interim relief was granted and the appeal was listed out of turn.

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Issues: (i) whether the assessee had made out a prima facie case for waiver of pre-deposit in respect of duty and penalty on gold bars cleared from gold powder, and (ii) whether the assessee could prima facie claim exemption under Notification No. 6/2000 or Notification No. 67/95.

Issue (i): whether the assessee had made out a prima facie case for waiver of pre-deposit in respect of duty and penalty on gold bars cleared from gold powder.

Analysis: The gold bars were produced by melting and casting gold powder, and the dispute turned on whether the duty demand could be sustained at the interim stage. The demand and penalty were held to be arguable, and the liability to penalty was also considered open to question on the facts noted.

Conclusion: A prima facie case was made out for waiver of the remaining pre-deposit of duty and penalty.

Issue (ii): whether the assessee could prima facie claim exemption under Notification No. 6/2000 or Notification No. 67/95.

Analysis: The claim under Notification No. 6/2000 was found arguable because the gold bars were manufactured from gold powder, even if the process began with anode slime. The claim under Notification No. 67/95 was also treated as arguable, including the effect of compliance with Rule 6 of the Cenvat Credit Rules and the question whether payment made after clearance could relate back to the clearance.

Conclusion: The exemption claims were not rejected at the prima facie stage and supported waiver of pre-deposit.

Final Conclusion: The assessee obtained interim relief against deposit of the balance duty and penalty, and the appeal was directed to be heard on an out-of-turn basis.

Ratio Decidendi: At the stay stage, where exemption and penalty issues are prima facie arguable, the tribunal may waive pre-deposit of duty and penalty pending final hearing.

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