Ship stores classification supports waiver of pre-deposit where goods supplied to the Navy show a strong prima facie case.

The dispute concerned whether zinc ingots supplied to the Indian Navy could prima facie be treated as ship stores for waiver of pre-deposit, and whether the departmental circular supported the Revenue's objection. The order noted that ship stores may include both consumable and non-consumable items, and found that the circular did not assist the Revenue's case. On that basis, the appellants were held to have a strong prima facie case, and full waiver of pre-deposit of the disputed duty and equal penalty was granted pending disposal of the appeal.

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Issues: Whether the appellants were required to pre-deposit the duty and equal penalty under Section 11AC, and whether the goods supplied to the Indian Navy were prima facie eligible to be treated as ship stores for the purpose of waiver of pre-deposit.

Analysis: The dispute centred on the classification of zinc ingots supplied to the Indian Navy and the applicability of the departmental circular relied upon by the Revenue. The order noted that ship stores include consumable as well as non-consumable items, and that the circular cited by the Revenue did not support its stand. On that basis, the appellants were found to have a strong prima facie case.

Outcome: Full waiver of pre-deposit of the disputed duty and penalty was granted, and the stay application was allowed pending disposal of the appeal.

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