Prima facie exemption for in-factory use of intermediate goods supported waiver of pre-deposit under the animal feed notification.

CESTAT New Delhi held that the assessee made out a prima facie case for waiver of pre-deposit where Niacin, an intermediate excisable product used within the factory in manufacturing Animal Feed Supplement, was claimed to fall within Notification No. 10/96-CE as amended. The tribunal noted that the final product was classified under Chapter 21 and the intermediate product under Chapter 29, and treated the issue as covered by the Larger Bench decision in Tetragon Chemie, affirmed by the Supreme Court, together with similar Tribunal rulings. On that basis, the stay petition was allowed unconditionally.

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Issues: Whether the appellant had a prima facie case for dispensation of pre-deposit on the claim that the exemption notification applied to the manufacture of Niacin used within the factory in the production of Animal Feed Supplement.

Analysis: The appellant's final product was Animal Feed Supplement classified under Chapter 21 and the intermediate product Niacin fell under Chapter 29 of the Central Excise Tariff Act, 1985. The exemption under Notification No. 10/96-CE dated 23.07.1996, as amended, covered excisable goods consumed within the factory in the manufacture of Animal Feed. The issue was treated as covered by the Larger Bench decision in Tetragon Chemie and the affirmed Supreme Court ruling, along with other identical Tribunal decisions, supporting the appellant's claim at the prima facie stage.

Conclusion: The appellant established a good prima facie case and was entitled to dispensation of pre-deposit. The stay petition was allowed unconditionally in favour of the assessee.

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