Pre-deposit waiver and exemption eligibility turned on whether expansion began after the required cut-off date.

Exemption under Notification No. 49/03-C.E. was treated as available only to units in existence before 7 January 2003 that had undertaken substantial expansion by at least 25% on or after that date. On the material discussed, the appellants' letters, balance sheet, production figures, invoices and correspondence indicated that the expansion and modernisation project had begun earlier and was already underway before that cut-off date, so a complete prima facie waiver was not justified. The record also did not show present financial hardship sufficient to excuse pre-deposit. Partial relief was therefore granted by waiving interest and penalty and 40% of the duty, with deposit of 60% of the duty ordered.

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Issues: Whether the appellants had made out a prima facie case and established financial hardship for waiver of pre-deposit in respect of the duty, interest and penalty confirmed while denying exemption under Notification No. 49/03-C.E. dated 10-6-2006.

Analysis: The exemption was available only to units existing before 7 January 2003 that had undertaken substantial expansion by increasing installed capacity by at least 25% on or after that date. On the material placed, the appellants' own letters to the financial corporation showed that the modernization and expansion project had commenced much earlier and was already in progress before January 2003. The balance sheet, production figures, invoices and correspondence also supported the view that the expansion activity was not shown to have commenced on or after 7 January 2003. As to financial hardship, the record did not establish present inability to comply with a pre-deposit order, particularly when production and capacity had continued to increase.

Conclusion: The appellants were not entitled to complete waiver of pre-deposit, but were granted partial relief by waiver of interest and penalty and 40% of the duty, with a direction to deposit 60% of the duty amount.

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