Prima facie case on exemption notification supported waiver of pre-deposit and stay of recovery at the interim stage.

A strong prima facie case on the applicability of an exemption notification can justify waiver of pre-deposit and stay of recovery at the interim stage. The tribunal found that the denial of exemption was not free from doubt and that, on stay proceedings, the use of consumables with raw material did not by itself justify refusal of interim protection. Waiver of pre-deposit and stay of recovery of the duty demand and penalty were therefore granted.

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Issues: Whether the assessee had made out a prima facie case for waiver of pre-deposit and stay of recovery of the confirmed duty and penalty, and whether the benefit of Notification No. 8/97-C.E. dated 01.03.1997 was available at the interim stage.

Analysis: The Notification was examined at the stage of stay. On that consideration, the assessee's plea that the denial of exemption was not free from doubt was found to disclose a strong prima facie case. At this stage, the use of consumables along with raw material was not treated as sufficient to refuse interim protection.

Conclusion: The assessee was held entitled to waiver of pre-deposit and stay of recovery.

Final Conclusion: Interim relief was granted in respect of the duty demand and penalty.

Ratio Decidendi: Where the assessee establishes a strong prima facie case on the applicability of an exemption notification, waiver of pre-deposit and stay of recovery may be granted at the interim stage.

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