Prima facie compliance with EOU notification conditions justified waiver of pre-deposit and stay of recovery.

Duty-free capital goods received by a 100% EOU, transferred to another 100% EOU under intimation, returned within one year, and installed and used for the intended purpose were treated as satisfying the notification condition at the prima facie stage. On that basis, the demand for duty, interest and penalty arising from alleged breach of Notification No. 22/2003-C.E. did not appear sustainable for interim relief, and waiver of pre-deposit with stay of recovery was granted pending appeal.

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Issues: Whether, for purposes of the stay application, the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery of the duty demand, interest and penalty arising from the alleged breach of the conditions of Notification No. 22/2003-C.E. dated 31-3-2003.

Analysis: The capital goods were received duty-free by a 100% EOU under the notification, were transferred to another 100% EOU under intimation, received back within the stipulated period of one year, and were installed in the factory and used for the intended purpose. On these facts, the condition requiring installation within one year was treated as satisfied for the purpose of interim relief, and the impugned demand and penalty were found not to appear correct at the prima facie stage.

Conclusion: The appellant was held entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

Ratio Decidendi: Where duty-free capital goods received by a 100% EOU are installed within the stipulated period and used for the intended purpose, a prima facie case exists for waiver of pre-deposit and stay of recovery.

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