Captive-consumption exemption supported waiver of pre-deposit and stay where goods were used to make specified pump products.

Prima facie entitlement to captive-consumption exemption justified waiver of pre-deposit where intermediate goods were used within the factory in manufacture of specified pump products. The Tribunal relied on Notification No. 5/98-C.E., Serial No. 265 read with Condition No. 51, which exempts goods falling under any chapter, subject to stated exclusions, when used in manufacturing centrifugal pumps, turbine pumps, submersible pumps, and axial and mixed flow vertical pumps. As compliance with Condition No. 51 was not disputed at that stage, the duty and penalty demand was not required to be secured. Waiver of pre-deposit was granted and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in view of the exemption available for goods used captively in the manufacture of specified pump products.

Analysis: The application for waiver arose from a demand of duty and penalty confirmed on the ground that the intermediate products were not eligible for captive consumption exemption because the final products were exempt. The Tribunal found a strong prima facie case in favour of the appellant on the basis of Notification No. 5/98-C.E. dated 2-6-1998, particularly Serial No. 265 read with Condition No. 51, which exempts goods falling under any chapter, subject to the stated exclusions, when used in the manufacture of centrifugal pumps, turbine pumps, submersible pumps and axial and mixed flow vertical pumps within the factory. Since compliance with Condition No. 51 was not disputed prima facie, the demand was not required to be secured at that stage.

Conclusion: Waiver of pre-deposit was granted and recovery of duty and penalty was stayed pending disposal of the appeal.

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