Prima facie inconsistent product classification and incomplete returns can defeat waiver of pre-deposit in exemption disputes.

Packing machines were reclassified from heading 84.22 to 84.34 only for clearances to dairy buyers after the exemption notification came into force, and the Tribunal treated this inconsistent product classification as a prima facie indicator that an inapplicable exemption under Notification No. 6/06-CE was being claimed. It also noted that the statutory returns used abbreviated descriptions and did not disclose the full product description to revenue, which weighed against the appellant at the pre-deposit stage. On that basis, further pre-deposit was directed, with balance duty and penalty stayed during the appeal subject to compliance, while the co-appellants' personal penalties were waived.

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Issues: Whether, in the facts of the case, the appellant was entitled to waiver of pre-deposit and stay of recovery pending appeal, and whether the extended period could be sustained at the prima facie stage.

Analysis: The packing machines were earlier classified under heading 84.22 and the appellant later shifted to heading 84.34 only in respect of clearances to dairy purchasers after the exemption notification came into force. The returns contained only abbreviated descriptions of the goods, and the Tribunal found that the revenue had not been given the full product description in the statutory returns. It also noted the inconsistent classification of the same product depending on the buyer, which at the prima facie stage indicated an attempt to claim an inapplicable exemption under Notification No. 6/06-CE dated 01/03/2006.

Conclusion: The appellant was directed to deposit a further amount of pre-deposit within the stipulated time, and on such deposit the balance duty and entire penalty were to remain waived with recovery stayed during the pendency of the appeal. The personal penalties on the two co-appellants were waived.

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