Exemption for used and damaged containers supported waiver of pre-deposit where the duty demand appeared unsustainable at the interim stage.

Clearance of used and damaged plastic and metal containers by an EOU was held to be prima facie covered by the exemption framework under the relevant customs and central excise notifications, because domestically procured containers attracted duty only when cleared without use and imported containers only if suitable for repeated use. On that factual basis, the duty demand raised under the computation notification did not appear sustainable at the interim stage, and the appellants established a prima facie case for waiver of pre-deposit and stay of recovery pending appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the duty demands on clearance of used and damaged plastic and metal containers by an EOU.

Analysis: The goods in dispute were used and damaged containers. On the facts noted, duty on domestically procured containers was attracted only when they were cleared without being put to use, while imported containers were liable only if suitable for repeated use. Since the record indicated that the impugned goods were damaged containers, the clearance was prima facie covered by the exemption framework under the customs and central excise notifications referred to, and the demand raised under the duty computation notification did not, at that stage, appear sustainable.

Conclusion: A prima facie case was made out for the appellants, and waiver of pre-deposit with stay of recovery pending disposal of the appeal was granted.

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