Prima facie non-excisability and lack of marketability justified waiver of pre-deposit and interim stay.

In a waiver-of-pre-deposit dispute, sludge, waste and scrap cleared without duty were treated as prima facie non-excisable or not marketable, and some scrap was noted as possibly not arising from any manufacturing process. The note also records that limitation and the applicability of the extended period required consideration. On these facts, a strong prima facie case was said to justify interim protection, with waiver of pre-deposit of duty and penalty and stay of recovery.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit of duty and penalty in respect of sludge, waste and scrap, and whether the demand and penalty were sustainable at the interim stage.

Analysis: The demand related to sludge, waste and scrap arising from inputs, packing material and capital goods cleared without payment of duty. Sludge was treated as prima facie non-excisable in view of the Board's circular. In respect of waste and scrap, some items were stated to be packing material or otherwise non-excisable, and mere sale of the goods did not by itself establish marketability. It was also noticed that some of the scrap did not appear to have resulted from any process of manufacture. The plea on limitation and the applicability of the extended period also required consideration. On these facts, the appellant showed a strong prima facie case.

Conclusion: Waiver of pre-deposit of duty and penalty was justified and recovery was stayed.

Ratio Decidendi: For purposes of waiver of pre-deposit, a strong prima facie showing that the disputed goods may be non-excisable, not marketable, or otherwise outside the scope of the demand is sufficient to justify interim protection.

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