Small scale industry exemption and debatable limitation issues justified waiver of pre-deposit and stay of recovery.

A prima facie claim to small scale industry exemption under Notification No. 175/86 supported waiver of pre-deposit and stay of duty and penalty recovery. The trade name and logo stood registered in the name of an Indian firm that had been recognised and assessed as a small scale industry unit, making para 7 of the notification appear applicable. An arguable limitation issue and differing views on the effect of use of a foreign firm's trade mark further showed the dispute to be debatable, justifying interim relief.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay against recovery of duty and penalty in view of the claim that the unit was eligible for small scale industry exemption under Notification No. 175/86.

Analysis: The trade name and logo were registered in the name of an Indian firm which was prima facie recognised and assessed as a small scale industry unit. On that basis, para 7 of Notification No. 175/86 appeared to support the claim for exemption. The Tribunal also found an arguable case on limitation and noted that the effect of use of a foreign firm's trade mark had been viewed differently by different regional benches, showing that the dispute raised a debatable issue fit for interim relief.

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

Ratio Decidendi: Where the assessee shows a prima facie entitlement to small scale industry exemption and the dispute raises debatable issues on limitation and the effect of trade mark use, pre-deposit may be waived and recovery stayed.

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