Exemption under Central Excise notifications justified waiver of pre-deposit where bagasse-based paper showed a strong prima facie case.

Paper products classifiable under Chapter 48 were considered for exemption under the relevant Central Excise notifications for the material period, and the record showed that the paper was manufactured from pulp containing more than 50% by weight of bagasse. That factual position prima facie satisfied the notification condition relating to manufacture from unconventional raw materials, so the applicants established a strong prima facie case. On that basis, pre-deposit was waived and recovery of the differential duty was stayed pending appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the differential duty on the footing that the disputed paper products were covered by the relevant exemption notifications for the period in question.

Analysis: The disputed products were classified by the department under Chapter Heading 48.06 and duty was demanded at tariff rate after denying exemption under Notification No. 138/86-C.E., as amended by Notification No. 30/93-C.E., and Notification No. 23/94-C.E. The relevant notifications were applicable to goods falling under Chapter 48 during the material period. The record also indicated that the paper had been manufactured from pulp containing more than 50% by weight of bagasse, which prima facie satisfied the condition relating to manufacture from unconventional raw materials. On that basis, the applicants established a strong prima facie case.

Conclusion: The applicants were entitled to waiver of pre-deposit and stay of recovery pending the appeal.

Ratio Decidendi: For purposes of interim relief, where the record shows a strong prima facie entitlement to exemption under the applicable notification and the statutory conditions appear satisfied, pre-deposit may be waived and recovery stayed.

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