Exemption for generating company fuel use supported waiver of pre-deposit and stay of recovery pending appeal

Exemption under Notification No. 6/2002-C.E. was claimed for LSHS used by an electricity generating company holding the requisite licence or sanction under the Indian Electricity Act. The record indicated that the appellants were an electricity generating company and had obtained sanction from the State Electricity Authority, creating a prima facie case that the exemption could apply. On that basis, waiver of pre-deposit of duty and penalty was granted and recovery was stayed during the pendency of the appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit of duty and penalty and stay of recovery during pendency of the appeal.

Analysis: The duty and penalty had been confirmed by denying the benefit of Notification No. 6/2002-C.E., which exempted LSHS used by a generating company holding the requisite licence or sanction under the Indian Electricity Act. The appellants were found to be an electricity generating company and to have obtained sanction from the State Electricity Authority. On this prima facie view, they were held to have a strong case on merits.

Conclusion: The appellants were granted waiver of pre-deposit of the duty and penalty and recovery was stayed until disposal of the appeal.

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