Prima facie case and conditional stay: limitation aided the credit dispute, but exemption on storage charges was not shown.

At the interim stage, the tribunal found a prima facie case on limitation for the CENVAT credit demand because the ST-3 returns had regularly disclosed credit taken and utilised. The storage and warehousing exemption was not made out prima facie, as soya bean meal was treated as a processing residue rather than agricultural produce, and the invoices suggested stock management charges linked to quantity rather than mere rent. The appellant was therefore put to terms, and a reduced pre-deposit was accepted. On deposit, the balance pre-deposit was waived and recovery of the remaining dues was stayed during 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, and whether a conditional stay should be granted in the appeal.

Analysis: The dispute was examined at the interim stage on limitation and merits. The demand relating to alleged excess utilisation of CENVAT credit was found to disclose a prima facie case for the appellant on limitation, since ST-3 returns had been filed regularly showing credit taken and utilised. On the storage and warehousing demand, the claimed exemption for storage of soya bean meal was not accepted prima facie because soya bean meal was treated as a residue of processing and not as agricultural produce under the exemption notification. The invoices also indicated stock management charges based on quantity of soya bean meal rather than mere rent for space, supporting the view that the appellant had not established a strong prima facie case on merits. In these circumstances, the appellant was required to be put to terms, and the offer of a reduced pre-deposit was accepted.

Conclusion: The appellant was directed to make a pre-deposit of Rs. 5,00,000 within six weeks, and on such deposit the balance pre-deposit was waived and recovery of the remaining dues was stayed during the pendency of the appeal.

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