Captive consumption of processed cotton fabrics and prima facie doubt on duty liability supported pre-deposit waiver.

Processed cotton fabrics captively consumed within the factory were discussed in relation to exemption under Notification No. 121/94, with emphasis on whether repetitive duty-credit adjustments were intended to be avoided for in-house consumption. The text also notes that Note 3 to Section 52, using the phrase "any one or more of these process", left the departmental theory of separate duty on each process open to doubt. On that prima facie view, and because the unit was described as a sick industrial unit, waiver of pre-deposit of duty and penalty was treated as justified pending appeal.

---

---

Issues: Whether processed cotton fabrics captively consumed within the factory were exempt from duty under Notification No. 121/94 and whether, in the circumstances, waiver of pre-deposit of duty and penalty was justified.

Analysis: The processed cotton fabrics were already liable to additional duty when cleared, and the notification was considered in the context of avoiding repetitive duty-credit adjustments on goods consumed within the factory. The wording of Note 3 to Section 52, referring to "any one or more of these process", also indicated that the departmental view of separate duty liability on each process was not free from doubt. The applicant was also shown to be a sick industrial unit, which supported interim relief.

Conclusion: The applicant established a prima facie case for waiver of the deposit of duty and penalty.

Final Conclusion: Pre-deposit of the demanded duty and penalty was waived, granting interim relief to the applicant pending the appeal.

Ratio Decidendi: Where the duty liability on captively consumed processed goods is prima facie debatable and the unit is a sick industry, pre-deposit may be waived in exercise of the Tribunal's discretionary powers.

---