Small scale industry exemption dispute turned on clubbing of clearances after takeover, with stay and pre-deposit waiver granted.

In a dispute over denial of small scale industry exemption after takeover of a factory, the Tribunal treated clubbing the appellants' clearances with those of the previous manufacturer as supporting a strong prima facie case against the demand. It noted that a similar clubbing approach had earlier been disapproved under another exemption notification and found the distinction between the two notifications unpersuasive at the interim stage. On that basis, waiver of pre-deposit and stay of recovery were granted.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery in a dispute relating to denial of small scale industry exemption.

Analysis: The demand arose because the department clubbed the clearances of the appellants with those of the previous manufacturer after takeover of the factory. The Tribunal noted that a similar exercise had been disapproved earlier in relation to another exemption notification, and found that the distinction sought to be drawn between the expressions used in the two notifications was not persuasive at this stage. On that basis, the appellants were held to have a strong prima facie case.

Conclusion: Waiver of pre-deposit and stay of recovery were granted.

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