Exemption notification linkage and limitation defence justified waiver of pre-deposit in a customs-linked excise dispute.

A strong prima facie case was found for waiver of pre-deposit where exemption under Notification No. 6/2006-CE depended on goods being exempt under the corresponding customs notification and additional duty provisions. Goods supplied for a mega power project were covered by Notification No. 21/2002-Cus, and that notification was not shown to make exemption conditional on the Exim Policy in the manner urged by the Revenue. Prior correspondence and disclosure of the clearance position also supported a prima facie limitation defence. On these materials, pre-deposit of duty, interest and penalties was waived and stay was granted.

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Issues: Whether the applicant had made out a prima facie case for waiver of pre-deposit, including on merits and limitation, in respect of the demand raised by denying the benefit of the exemption notification.

Analysis: The exemption under Notification No. 6/2006-CE was linked to goods exempted from customs duty under the relevant customs notification and the additional duty under Section 3 of the Customs Tariff Act. The goods supplied for a mega power project were covered by Notification No. 21/2002-Cus, and that notification did not make its benefit conditional upon the Exim Policy in the manner suggested by the Revenue. The record also indicated prior correspondence and disclosure of the clearance position, which supported the plea that the demand was prima facie time-barred. On these materials, the applicant established a strong case both on merits and on limitation.

Conclusion: Pre-deposit of duty, interest, and penalties was waived, and the stay petitions were allowed in favour of the assessee.

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