Prima facie case on cotton fabric processing under Rule 96D supported waiver of pre-deposit and stay of recovery.

Processing of cotton fabrics under Rule 96D of the Central Excise Rules, 1944 raised a prima facie case for waiver of pre-deposit where the same issue had already been granted unconditional stay in a similar job worker matter. The Tribunal accepted that removal of the processed fabrics followed the procedure under sub-rule (3), and that the processing activity did not, at that stage, show a change in the identity of the fabrics. It also noted that the later LDPE/HDPE coating was carried out by the principal manufacturer, supporting stay of recovery pending 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 in respect of the duty, interest and penalty demand arising from processing of cotton fabrics under Rule 96D of the Central Excise Rules, 1944.

Analysis: The Tribunal noted that the matter involved an identical issue previously considered in another job worker's case, where unconditional stay had been granted. It accepted the view that the procedure prescribed under sub-rule (3) of Rule 96D had been followed for removal of processed fabrics and that the processing activity did not, at that stage, establish a change in the identity of the fabrics. It also noted that the further LDPE/HDPE coating was undertaken by the principal manufacturer, supporting a strong prima facie case.

Conclusion: The appellant was entitled to waiver of the entire pre-deposit of duty, interest and penalty, with recovery stayed until disposal of the appeal.

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