Pre-deposit waiver in textile job-work dispute granted on prima facie case and revenue-neutral demand

Waiver of pre-deposit and stay of recovery were granted in a textile job-work dispute where the applicants established a strong prima facie case. The Tribunal noted the long-standing arrangement, earlier departmental acceptance under the old rule, and the substantial similarity between the new and erstwhile provisions governing movement of inputs to a job worker. It also considered that the processed fabrics were cleared by the principal manufacturer on duty payment and that the demand appeared revenue-neutral because Cenvat credit for inputs had not been extended in the computation. Supporting Tribunal precedent further strengthened the applicants' case.

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Issues: Whether waiver of pre-deposit and stay of recovery should be granted in respect of the duty demand and penalties pending disposal of the appeals.

Analysis: The applicants showed a strong prima facie case on the basis of the long-standing job-work arrangement in the textile sector and the earlier practice accepted by the department under the corresponding old rule. The new rule governing movement of inputs to a job worker was treated as substantially similar to the erstwhile provision, and the processed fabrics were being cleared by the principal manufacturer on payment of duty. The demand had also been worked out without extending Cenvat credit for inputs used in manufacture, supporting the plea that the exercise was revenue-neutral. The cited Tribunal decision offered some support to the applicants' case.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellant and the connected applicants.

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