Waiver of pre-deposit granted on prima facie unsustainable duty demands, including stock, catalyst use and DTA clearances.

Prima facie waiver of pre-deposit was justified where the duty demands on finished goods stock at debonding, used catalyst, and DTA clearances of pyridine residue were found unsustainable or time-barred. The stock demand was treated as covered by an earlier order already implemented by the Department, so the issue could not be reopened by reclassifying work-in-progress as finished goods. The catalyst demand was prima facie defective because it rested on a ground not alleged in the show cause notice and lacked supporting material. The pyridine residue demand was also prima facie untenable because Foreign Trade Policy import restrictions could not be applied to DTA clearances, and disclosure in ER-2 returns negatived extended limitation.

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Issues: Whether, in the appeal against confirmation of duty, interest and penalty, the appellant had made out a strong prima facie case for waiver of pre-deposit and stay of recovery on the grounds that the demands relating to stock of finished goods on debonding, used catalyst, and DTA clearances of pyridine residue were unsustainable or time-barred.

Analysis: The stock-related demand was found prima facie unsustainable because the same controversy had already been decided in the appellant's favour in an earlier order, and the Department, having implemented that order, could not reopen the issue by adding work-in-progress as finished goods and denying the exemption again. The catalyst demand was found prima facie defective because the impugned demand was confirmed on a ground not alleged in the show cause notice and there was no supporting material for the finding that the catalyst had not been used as first charge. The pyridine residue demand was found prima facie untenable because restrictions on import under the Foreign Trade Policy could not be transposed to DTA clearances of goods manufactured by a 100% EOU, the clearances had been disclosed in ER-2 returns, and invocation of the extended period was therefore not justified.

Conclusion: The requirement of pre-deposit would cause undue hardship, so pre-deposit of duty, interest and penalty was waived and recovery was stayed pending disposal of the appeal.

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