Pre-deposit waiver for debatable suppression and hardship where imported processing aids were treated as consumables in manufacture.

Imported substances used only as processing aids in yarn manufacture, and consumed in very small quantities, were treated as consumables rather than raw materials, supporting the view that the concessional notification could still apply. On that basis, the suppression and extended-limitation controversy was regarded as highly debatable, and the assessee's sick-unit status and takeover of assets reinforced hardship. Insistence on a substantial pre-deposit was therefore not justified, and full waiver of pre-deposit was granted while the Tribunal's deposit direction was set aside.

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Issues: Whether the assessee was entitled to full waiver of pre-deposit in the appeal before the Tribunal, having regard to the controversy on suppression of facts, availability of the extended period of limitation, and the assessee's financial position.

Analysis: The imported substances were found to be processing aids used in the manufacture of yarn and not raw materials as such. Their very small consumption supported the view that they were consumables and could reasonably have been understood as not disqualifying the assessee from the concessional notification. In these circumstances, the dispute on suppression and limitation was held to be highly debatable. The assessee's unit was also shown to be sick and its assets had been taken over, which reinforced the plea of hardship. On these facts, insistence on a substantial pre-deposit was not justified.

Conclusion: The assessee was held entitled to full waiver of pre-deposit, and the Tribunal's direction requiring deposit of Rs. 5 crores was set aside.

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