Captive intermediate goods exemption sustained where SEZ clearances were treated as exports and not exempted or nil-rated goods.

Captive intermediate goods remained eligible for Notification No. 67/95-C.E. where the final product was cleared to SEZ units, because such clearances were treated as exports under bond and were not shown to be exempted goods or goods chargeable to nil rate of duty. The proviso denying the exemption was not attracted on the available record, and the cited precedent was distinguishable because it involved a final product expressly exempted under a different notification. A prima facie case for stay was therefore made out, and recovery of the demand was waived pending disposal of the appeal.

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Issues: Whether the benefit of Notification No. 67/95-C.E. was prima facie deniable on the ground that the final product was cleared to SEZ units and, on that basis, stay of the demand was warranted.

Analysis: The notification exempted the captive intermediate product from duty, subject to a proviso denying the benefit only in specified situations. Clearance of the final product to SEZ units was not shown to be exempt from duty under any statutory provision or exemption notification. Such clearances were treated as exports and made under bond, and goods so cleared were not regarded as exempted goods or goods chargeable to nil rate of duty. The cited precedent was distinguishable because it involved a final product specifically exempted under a different notification.

Conclusion: The appellants made out a prima facie case for stay, and the demand under the impugned order was waived till disposal of the appeal.

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