Exemption for acrylic blankets from duty-paid yarn supported a prima facie case, justifying waiver of pre-deposit and stay.

Amendments to Notification No. 15/2002-C.E. expanded the exemption for blankets made from duty-paid yarn, first to knitted fabric and then retrospectively to cases where duty was paid at the yarn stage even if no duty was paid on the intermediate fabric. On that basis, the appellant was found to have a strong prima facie case for exemption in respect of acrylic blankets. Waiver of pre-deposit was granted, and recovery of the duty demand under the impugned order 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 under Notification No. 15/2002-C.E. dated 1-3-2002, as amended, in relation to exemption for acrylic blankets manufactured from duty-paid yarn.

Analysis: The notification originally covered blankets manufactured out of woven fabric on which appropriate duty had been paid. It was subsequently amended to enlarge the exemption to blankets manufactured out of knitted fabric, and was further amended retrospectively so that exemption would also be available where duty had been paid on the yarn even if duty had not been paid at the intermediate fabric stage. In view of these amendments, the appellant's claim was found to disclose a strong prima facie case.

Conclusion: Waiver of pre-deposit was granted and recovery of the amounts demanded under the impugned order was stayed till disposal of the appeal.

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