Prima facie exemption denial and pre-deposit dispute led to partial stay of recovery pending appeal.

Interim relief in a service-tax/excise appeal turned on a prima facie challenge to denial of exemption under Notification No. 23/2003-CE, where imported paraffin wax was alleged to have been used in the manufacture of the final product. The Tribunal was not persuaded at the stay stage that paraffin wax was merely a consumable, as it appeared to form part of the final product. The limitation objection was left open for final hearing. As a result, the appellant was directed to pre-deposit 20% of the duty demand, while waiver of the balance and stay of recovery were granted only for the remaining amount.

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Issues: Whether, in the pending appeal, the appellant was entitled to waiver of pre-deposit of the entire demand and stay of recovery pending disposal of the appeal.

Analysis: The appeal arose from a demand based on denial of exemption under Notification No. 23/2003-CE on the ground that imported paraffin wax had been used in the manufacture of the final product. On a prima facie assessment, the Tribunal was not persuaded by the appellant's contention that paraffin wax was merely a consumable, since it appeared to form part of the final product. The plea that the demand was time-barred was left for consideration at the time of final hearing. In the circumstances, the Tribunal directed a partial pre-deposit of 20% of the duty demand and granted waiver of the balance amount and stay of recovery during the pendency of the appeal.

Conclusion: The appellant was granted only partial interim relief, with a direction to pre-deposit 20% of the duty demand and with waiver and stay confined to the balance amount.

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