Exemption under Notification 30/2004-CE limited to input credit, supporting waiver of predeposit and stay of recovery.

Notification No. 30/2004-CE, as clarified by its corrigendum, was read as denying exemption only where credit of duty on inputs had been taken, not where credit related to capital goods. On that construction, the Tribunal held that the appellants manufacturing cotton yarn had raised a strong prima facie case for relief. It therefore granted waiver of predeposit of duty, interest and penalty, and stayed recovery until disposal of the appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of predeposit of duty, interest and penalty in view of the scope of Notification No. 30/2004-CE dated 09.07.2004 and its corrigendum.

Analysis: The appellants manufactured cotton yarn falling under Chapter 52 of the Central Excise Tariff Act, 1985. The dispute turned on the effect of Notification No. 30/2004-CE and the subsequent corrigendum, which clarified that the exclusion from exemption would apply where credit of duty on inputs had been taken. On the material before it, the Tribunal found that the restriction was confined to credit taken on inputs and not capital goods. The existence of a supporting stay order in a similar matter reinforced the view that the appellants had raised a strong prima facie case.

Conclusion: The appellants were entitled to waiver of predeposit of the entire duty, interest and penalty, and recovery was stayed till disposal of the appeal.

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