Prima facie exemption claim for ammonia used in melamine manufacture justified conditional stay of duty recovery

A prima facie exemption claim under Notification No. 217/86 for ammonia used in the manufacture of melamine was found sufficient for interim protection, because the authorities below had not examined that plea. The objection that ammonia was used through molten urea did not displace the claim at the stay stage. Conditional relief was granted by requiring a personal bond for the duty amount within four weeks, and recovery of the duty was stayed and waived on compliance.

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Issues: Whether the applicants were entitled to stay and waiver of recovery of the duty demand on a prima facie showing that exemption under Notification No. 217/86 was available in respect of ammonia used in the manufacture of melamine.

Analysis: The applicants had claimed the benefit of Notification No. 217/86 in the classification list and in reply to the show cause notice, but the authorities below had not examined that plea. On the material placed, the exemption claim relating to ammonia used in the production chain leading to melamine disclosed a prima facie case. The objection that ammonia was used through molten urea did not displace the prima facie applicability of the notification at this stage.

Conclusion: The applicants were directed to furnish a personal bond for the duty amount within four weeks, and upon such compliance recovery of the duty was stayed and waived.

Final Conclusion: Interim protection was granted on a conditional basis, and the demand was not required to be paid during the pendency of the appeal if the bond was furnished.

Ratio Decidendi: Where an exemption claim is prima facie arguable and has not been considered by the authorities below, interim stay and waiver of recovery may be granted subject to furnishing security.

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