Prima facie exemption entitlement supports waiver of pre-deposit and stay of recovery in a disputed tariff classification case.

A prima facie showing of entitlement to exemption can justify waiver of pre-deposit and stay of recovery pending appeal. The appellant failed to establish a prima facie case under Notification No. 3/2004-C.E. because the material did not sufficiently show that the goods were machinery rather than a complete plant. By contrast, the certificate of the Maharashtra Pollution Control Board supported the claim that the goods functioned as an effluent treatment unit with reverse osmosis for water reuse, and the absence of some listed facilities did not defeat the claim at this stage under Notification No. 6/2002-C.E. The comparable exemption entry was treated as pari materia, and interim protection was granted.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery pending appeal on a prima facie showing that the disputed goods qualified for exemption under the relevant notifications.

Analysis: The disputed product was assessed under Chapter Heading 84.21 of the Schedule to the Central Excise Tariff Act, 1985, and exemption was denied under Notification No. 3/2004-C.E. and Notification No. 6/2002-C.E. The applicants did not make out a prima facie case under Notification No. 3/2004-C.E. because the material placed did not sufficiently show that the goods were machinery rather than a complete plant. However, for Notification No. 6/2002-C.E., the certificate of the Maharashtra Pollution Control Board indicated that the goods functioned as an effluent treatment unit with reverse osmosis for reuse of water, and the objection that other listed facilities were absent was held to be not prima facie sustainable. The language of the comparable exemption entry was treated as pari materia with the notification relied upon by the applicants.

Conclusion: The applicants established a prima facie case for exemption under Notification No. 6/2002-C.E. and were entitled to waiver of pre-deposit and stay of recovery pending appeal.

Final Conclusion: Interim protection was granted in the appeal because the alternate exemption claim was sufficiently supported at the prima facie stage.

Ratio Decidendi: At the stage of waiver of pre-deposit, where the appellant shows a prima facie entitlement to exemption under a materially similar notification, recovery can be stayed pending disposal of the appeal.

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