Exemption for paper and paperboard from pulp stage supported waiver of predeposit and stay of recovery pending appeal.

Exemption for paper and paperboard manufactured from the pulp stage was treated as available where the goods were produced from pulp of the required specification, even if the pulp was not manufactured in the same factory. The Board circular was read as clarifying that intra-factory manufacture of pulp was not a condition for the concession. Denial of exemption on the ground of absent testing of pulp content was also viewed as going beyond the scope of the show cause notice. On that basis, a prima facie case was made out for waiver of predeposit of duty and penalty, and recovery was stayed pending appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of predeposit and stay of recovery in respect of the duty and penalty demand arising from denial of exemption under the relevant notifications.

Analysis: The exemption notifications covered paper and paperboard manufactured starting from the stage of pulp. The Board circular clarified that the concession would not be denied merely because the pulp was not manufactured in the same factory, so long as the goods were manufactured from pulp of the required specification. The order further noted that the denial of exemption in the impugned order was based on the alleged absence of testing regarding the pulp content, which appeared to go beyond the scope of the show cause notice.

Conclusion: The appellant had established a prima facie case for waiver of the entire predeposit of duty and penalty, and recovery was stayed pending the appeal.

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