EOU clearances and excise exemption supported waiver of pre-deposit and stay of recovery in the interim.

Clearances by a 100% EOU under Para 9.10(b) of the EXIM Policy were treated as distinct from ordinary DTA sales and, on a prima facie view, as falling within the exemption for EOU supplies under Notification No. 125/84-C.E. The analysis relied on prior appellate orders holding that no Central Excise duty was chargeable on such supplies and on the Supreme Court's construction of "allowed to be sold" as limited to the 25% DTA sale quota. On that basis, the duty demand and penalties under Rules 209 and 209A were held unsustainable at the interim stage, and waiver of pre-deposit with stay of recovery was granted pending the appeals.

---

---

Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of duty and penalties arising from clearances by a 100% EOU under Para 9.10(b) of the EXIM Policy.

Analysis: The clearances in question were treated as distinct from ordinary DTA sales and were held to be covered by the exemption available to EOU clearances under Notification No. 125/84-C.E. The order noted prior appellate orders holding that no Central Excise duty was chargeable on such supplies, the rejection of the Revenue's stay application in the same assessee's case, and the Supreme Court's interpretation of the expression "allowed to be sold" as confined to the 25% DTA sale quota. On that prima facie view, the duty demand and the penalties under Rules 209 and 209A were not sustainable at the interim stage.

Conclusion: The appellants were entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeals.

---