Prima facie case and extended limitation in a stay application led to only partial waiver of pre-deposit.

In a stay application, the tribunal examined whether the applicant had shown a prima facie case for complete waiver of pre-deposit and whether the extended period of limitation was available to the Department. It noted that departmental supervision and prior knowledge of the use of imported consumables made the extended limitation issue doubtful at the prima facie stage, but also found that the adjudicating authority had given detailed reasons for rejecting the claim that the consumables were used only in processed fabric. On that basis, the applicant was not entitled to full waiver, and only partial interim relief was granted with a directed deposit and protection of the balance demand pending appeal.

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Issues: Whether the applicant had made out a prima facie case for waiver of pre-deposit of duty and penalty, and whether the extended period of limitation was, at this stage, available to the Department.

Analysis: The order records that the Department had supervised the assessee's activities and had knowledge of the use of imported consumables, which made the applicability of the extended period of limitation doubtful at the prima facie stage. On the merits of the demand within the normal period, the order notes that the adjudicating authority had examined the certificates relied upon by the applicant and had given detailed reasons for not accepting the contention that the consumables were used only in processed fabric. The nature of the chemicals was viewed as not excluding their use in unprocessed yarn and fabric.

Conclusion: The applicant was not held to have made out a prima facie case for complete waiver. Partial relief was granted by directing a deposit of Rs. 10 lakhs and waiving recovery of the balance during the pendency of the appeal upon compliance.

Final Conclusion: Interim relief was granted only in part, with the appeal remaining subject to compliance with the directed deposit.

Ratio Decidendi: In a stay application, where the record does not establish a strong prima facie case on the disputed classification or use of goods, the tribunal may grant only partial waiver and protect the balance demand pending appeal.

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