Prima facie non-liability to cess justified unconditional waiver of pre-deposit and stay of recovery pending appeal.

Where a bus body builder is not engaged in the manufacture of vehicles, a cess demand computed as a percentage of vehicle value is not prima facie sustainable against it. Relying on the applicable Board circular and the earlier dropping of proceedings for an earlier period, the CESTAT found a strong prima facie case in favour of the appellants. Unconditional waiver of pre-deposit and stay of recovery of the disputed amounts were therefore granted pending disposal of the appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery in respect of the cess demand.

Analysis: The appellants were engaged in bus body building and not in the manufacture of vehicles. On a prima facie view, the demand of cess calculated as a percentage of the value of vehicles was not sustainable against them. The Board's circular supporting this position was also relied upon, and the earlier dropping of proceedings for a prior period strengthened the prima facie case.

Conclusion: The appellants were entitled to unconditional waiver of pre-deposit and stay of recovery of the disputed amounts pending disposal of the appeal.

Final Conclusion: Interim relief was granted in favour of the appellants, and the matter was directed to proceed to final hearing in due course.

Ratio Decidendi: Where a prima facie case shows that the assessee is not covered by the levy, unconditional waiver of pre-deposit and stay of recovery may be granted pending appeal.

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