Prima facie case in stay proceedings can justify conditional waiver, but arguable excisability may still require pre-deposit.

A stay application on duty and penalty demands may be supported by a prima facie case on exemption, limitation, or non-marketability of an intermediate product, but conditional pre-deposit can still be required where excisability remains arguable and the revenue's case is not displaced at the interlocutory stage. Here, captively consumed goods and prior disclosure to the department provided a prima facie basis for the exemption and limitation pleas in some appeals, while other appeals remained contestable on excisability and clearances. Interlocutory relief was therefore granted only in part, subject to pre-deposit, with recovery of the balance stayed pending compliance.

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Issues: Whether the impugned demands were fit to be stayed in view of the appellants' prima facie case on marketability and excisability of the intermediate product, the plea of limitation, and the claim of exemption for captive consumption under Notification No. 10/96.

Analysis: The applications arose in the context of a stay request against adjudication orders demanding duty and penalty. For three appeals, the record showed that the exemption claim under Notification No. 10/96 had been communicated before the adjudication order was finalised, and the goods were stated to be consumed captively in the manufacture of gutkha. That gave a prima facie basis for considering the exemption plea. For the remaining two appeals, the question whether the material was excisable was found to be arguable, and the pattern of clearances on payment of duty over a period of time supported the department's case at the interlocutory stage. On limitation, the appellants' earlier disclosure to the department gave them a prima facie case against extension of the demand beyond six months.

Conclusion: Stay was granted in part, subject to pre-deposit of Rs. 40 lakhs, and recovery of the balance duty and penalty was stayed pending compliance.

Final Conclusion: The order granted only interlocutory relief and did not finally decide the merits of excisability, exemption, or limitation.

Ratio Decidendi: In a stay application, a prima facie case on exemption, limitation, or non-marketability can justify conditional waiver of pre-deposit, while the revenue's case may still warrant deposit where the merits remain arguable.

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