E.T. sludge exemption for effluent treatment plant waste supported waiver of pre-deposit and stay of recovery

E.T. sludge cleared from the factory was treated, at the prima facie stage, as covered by the exemption for sludge obtained in an effluent treatment plant under Notification No. 76/86-C.E. dated 10-2-1986. The goods were removed on commercial invoices and arose as waste in the paper manufacturing process, so the appellant made out a prima facie case that the disputed clearance fell within the exemption. On that basis, waiver of pre-deposit was granted and recovery 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 and stay of recovery on the footing that E.T. sludge cleared from the factory was covered by the exemption for sludge obtained in an effluent treatment plant.

Analysis: The amount of duty, interest and penalties had been confirmed on the allegation that the appellant removed E.T. sludge without payment of duty. The record showed that the sludge was cleared from the factory on commercial invoices and arose as waste in the paper manufacturing process. On a prima facie reading, Notification No. 76/86-C.E. dated 10-2-1986 exempted sludge obtained in an effluent treatment plant of an industrial unit, and the description "E.T. sludge" brought the cleared goods within that exemption at the interim stage.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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