SSI exemption for cashew shell liquid upheld prima facie, with full pre-deposit waiver and recovery stayed

Cashew shell liquid classified under Chapter Heading 13021920 was treated as prima facie covered by the Small Scale Industry exemption, because the amended annexure to Notification No. 8/2003-CE, as clarified by the TRU letter dated 01.03.2006, corrected the exemption entry to Chapter 9 to 20. On that basis, the appellant established a prima facie case that the denial of exemption was not sustainable at the interim stage. The entire pre-deposit of duty, interest and penalty was therefore waived, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant was entitled to Small Scale Industry exemption for cashew shell liquid falling under Chapter Heading 13021920 and, consequently, to waiver of pre-deposit and stay of recovery.

Analysis: The amended annexure to Notification No. 8/2003-CE, as clarified by the TRU letter dated 01.03.2006, corrected the relevant entry to read as Chapter 9 to 20. Since the appellant's goods fall under Chapter 13, they are covered by the amended exemption entry. On that basis, the appellant made out a prima facie case that the exemption was available and that the demand based on denial of the exemption required no immediate recovery pending appeal.

Conclusion: The appellant was held entitled, prima facie, to the SSI exemption and the entire pre-deposit of duty, interest and penalty was waived, with recovery stayed till disposal of the appeal.

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