Captive-use exemption under Notification 67/95-C.E. supported waiver of pre-deposit where SSI-cleared final products were not wholly exempt

Notification No. 67/95-C.E. was read, on a prima facie basis, as denying captive-use exemption only where the final products are wholly exempt from duty or chargeable at nil rate; that bar was not shown to apply to final products cleared under the SSI exemption. The appellate order had not adequately examined this construction, so the appellants established a prima facie case for waiver of pre-deposit and stay of recovery of the duty and penalty demands on plastic strips captively used in making plastic woven sacks.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of duty and penalty on plastic strips captively used in the manufacture of exempted final products, with reference to Notification No. 67/95-C.E.

Analysis: The appellants manufactured plastic strips as an intermediate product and used them captively in the manufacture of plastic woven sacks. The Revenue's objection rested on the proviso to Notification No. 67/95-C.E., contending that the benefit was unavailable because the final product was cleared under the SSI exemption notification. On a prima facie appreciation, the notification was capable of the construction that the bar applies only where the final products are wholly exempt from duty or chargeable to nil rate, and the final product under the SSI notification was not shown to answer that description. The order under challenge had not examined the point adequately.

Conclusion: The appellants established a prima facie case and were entitled to waiver of pre-deposit and stay of recovery of the duty and penalty demands.

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