Broad reading of exemption notification supported waiver of pre-deposit and stay of recovery in a customs duty dispute.

Notification No. 52/03 was interpreted broadly at the prima facie stage to cover goods used in connection with production, packaging or job work, not only items directly used in manufacturing. The Tribunal noted that the notification itself listed goods such as PABX, fax machines and laptops, which supported a wider reading of the exemption. On that basis, the appellant was found to have a strong prima facie case for interim relief, and waiver of pre-deposit of duty and penalty was granted with recovery stayed during the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of the demanded duty and penalty and stay of recovery during the pendency of the appeal.

Analysis: The demand had arisen from denial of the benefit of Notification No. 52/03 on the premise that networking systems, personal computers, monitors, printers and similar items were not directly used in manufacturing. The Tribunal found that the language of the notification, prima facie, was wide enough to cover items used in connection with production, packaging or job work, and noted that the notification itself listed items such as PABX, fax machines and laptops, which are not directly used for production. On that basis, a strong prima facie case was made out for relief at the stage of pre-deposit.

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

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