Exemption for woven cotton fabrics upheld prima facie where bleaching, dyeing or printing was not done on the fabrics themselves.

Woven cotton fabrics were treated as covered by Notification No. 38/03-C.E. for the relevant period, and the proviso requiring bleaching, dyeing or printing on the fabrics without aid of power or steam was not attracted on a prima facie view. The fabrics were woven from dyed yarn, but no bleaching, dyeing or printing was carried out on the fabrics themselves. On that basis, there was no valid ground at the interim stage to deny the exemption benefit, and waiver of pre-deposit and stay of recovery were justified against the duty and penalty demands.

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Issues: Whether the assessee was entitled, for the purpose of waiver of pre-deposit and stay, to claim the benefit of Notification No. 38/03-C.E. dated 30-4-2003 in respect of woven cotton fabrics where the processes mentioned in the proviso were not carried out on the fabrics.

Analysis: The goods were woven cotton fabrics covered by the notification during the relevant period. The only controversy was the proviso requiring bleaching, dyeing or printing, or any one or more of those processes, on the fabrics without the aid of power or steam. On a prima facie examination, the fabrics had not undergone any of the processes specified in the proviso; the fabrics were woven out of dyed yarn and no dyeing, bleaching or printing was done on the fabrics themselves. The proviso was therefore not attracted, and there appeared to be no valid basis for denying the notification benefit at the interim stage.

Conclusion: The assessee was entitled to waiver of pre-deposit and stay of recovery in respect of the duty and penalty demands.

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