Exemption option cannot be inferred from duty paid on a different product; predeposit waiver and stay granted.

Duty paid on scrap did not amount to an exercise of option to clear PVC pipes on payment of duty, where the exemption notification applied to PVC pipes and the appellants were only carrying out job work on raw materials supplied by another concern for labour charges. On that basis, the claimed small scale industry exemption was not effectively rebutted, and a prima facie case against the duty demand and penalties was found for waiver of predeposit and stay of recovery. Interim relief was therefore granted, and recovery of the disputed duty and penalties was stayed pending disposal of the appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of predeposit and stay of recovery in respect of the duty demand and penalties, particularly on the claim of small scale industry exemption.

Analysis: The appellants were found to have been doing job work on raw materials supplied by another concern and had received only labour charges. The goods on which duty had been paid were scrap, whereas the exemption notification related to PVC pipes. Payment of duty on scrap did not amount to an exercise of option to clear PVC pipes on payment of duty. In these circumstances, the claim for SSI benefit was not effectively rebutted, and a prima facie case against the demand and penalties was made out.

Conclusion: The appellants were entitled to waiver of predeposit and stay of recovery.

Final Conclusion: Interim relief was granted, and recovery of the disputed duty and penalties was stayed pending disposal of the appeal.

Ratio Decidendi: Payment of duty on a different product does not constitute exercise of an exemption option for the goods covered by the notification, where the notification itself applies to another specified product.

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