Continuous compliance with exemption conditions is essential; temporary use of imported goods does not justify full waiver of pre-deposit.

Exemption-linked duty-free import benefits depend on continuous compliance with the notification conditions, not merely on initial installation or temporary use of the imported capital goods and raw materials. The CEGAT note states that where the intended export-oriented manufacture is not continuously pursued, exemption eligibility weakens and the earlier use of the goods does not by itself justify full waiver of pre-deposit. Financial hardship may be considered for interim relief, but only as a factor in granting partial relief. On the stated facts, full waiver was declined, partial waiver was ordered, and recovery of the balance was stayed pending appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery, and whether the benefit of duty-free import under the exemption notifications could be claimed when the imported capital goods and raw materials were not continuously used for the intended export-oriented manufacture.

Analysis: The imported capital goods and raw materials had admittedly been installed and used for some time, but that by itself was not sufficient to establish eligibility for duty-free import under the notifications. The order held that continuous use of the goods for the intended export objective was necessary, and that the exemption had to be examined in light of whether the underlying condition of achieving the export-oriented purpose was being continuously fulfilled. Reliance was placed on the principle that exemption conditions are to be strictly complied with and that continuing obligations under such notifications cannot be ignored once the objective ceases to be met. On the facts, the unit's limited export performance and non-use for a number of years did not establish a strong prima facie case for full waiver. Financial hardship was also considered, but only as a relevant factor in moulding interim relief.

Conclusion: The appellants were not entitled to full waiver of pre-deposit. Partial waiver was granted on condition of deposit of specified sums, with stay of recovery of the balance pending appeal.

Final Conclusion: Interim relief was granted only in part, and the appeals were permitted to proceed subject to compliance with the ordered deposits.

Ratio Decidendi: For claiming exemption-linked duty-free import benefits, the stipulated conditions must be shown to continue to be satisfied, and a mere initial installation or temporary use of the imported goods does not by itself establish entitlement to full waiver of pre-deposit.

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