Exemption for 100% EOU clearances supported prima facie waiver of pre-deposit against converted excise duty demand.

Exemption for goods manufactured and cleared by a 100% EOU under Notification No. 55/91-C.E. continued to apply to the additional excise duty component, even though the demand was supported by Notification No. 8/97-C.E. as amended. The record treated the duty described as basic excise duty as effectively absorbing the additional duty element, which supported a strong prima facie case for interim relief. On that basis, the appellants were entitled to waiver of pre-deposit and stay of recovery in respect of the converted excise duty demand.

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Issues: Whether the appellants had made out a strong prima facie case for waiver of pre-deposit and stay of recovery in respect of the demand raised by converting additional excise duty into basic excise duty in the light of the exemption notifications.

Analysis: The claim rested on the existence of Notification No. 55/91-C.E., which exempted goods manufactured and cleared by a 100% EOU from additional excise duty under the Additional Duties of Excise (Textiles & Textile Articles) Act, 1978. The impugned demand was sought to be supported by Notification No. 8/97-C.E. as amended, but the record accepted that the earlier exemption notification continued to operate. On that basis, and in view of the finding that the duty shown as basic excise duty effectively absorbed the additional duty component, the matter disclosed a strong prima facie case for interim protection.

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

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