Prima facie case against compounded levy supported waiver of pre-deposit and stay in textile excise dispute.

A strong prima facie case was found for waiver of pre-deposit and stay of recovery where the duty demand arose from use of a stenter dismantled with departmental permission and from Section 3A read with Rule 96ZQ. The Tribunal noted the subsisting High Court decision quashing the compounded levy on independent textile processors under Rule 96ZQ and held, on the materials before it, that no duty could have been demanded for the disputed period. Relief was therefore granted by way of waiver of pre-deposit and stay of recovery.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery of the duty and penalties demanded under Section 3A of the Central Excise Act, 1944 and Rule 96ZQ of the Central Excise Rules, 1944.

Analysis: The demand was connected with the use of a stenter that had been dismantled with departmental permission, and the Tribunal noted the subsisting High Court decision quashing the compounded levy on independent textile processors under Rule 96ZQ. On the materials before it, the Tribunal found a strong prima facie case that no duty could have been demanded from the assessee under Section 3A in respect of the disputed period.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants.

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