Pre-deposit relief in exemption dispute: arguable case, but complete waiver denied and interim protection made conditional.

An appeal concerning denial of exemption for manufacture of thinner under Notification No. 230/86 turned on both the applicability of the exemption and the factual issue whether power was used in transferring raw materials to the manufacturing site. The matter was considered arguable on both sides, but no strong prima facie case was shown for complete waiver of pre-deposit at that stage. Pre-deposit of Rs. 5 lakh was directed within three months; on compliance, the balance duty was waived and recovery stayed during pendency of the appeal, while default would vacate the interim protection and expose the appeal to dismissal.

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Issues: Whether, in an appeal concerning denial of exemption for manufacture of thinner under Notification No. 230/86 dated 03.04.1986, the appellant was entitled to full waiver of pre-deposit and stay of recovery pending disposal of the appeal.

Analysis: The dispute involved both the legal applicability of the exemption notification and the factual question whether power was used in transferring raw materials to the manufacturing place. The claim was found to be arguable on both sides, but the appellant was held not to have made out a strong prima facie case for complete waiver at that stage.

Outcome: Pre-deposit of Rs. 5 lakh was directed within three months, and on compliance the balance duty was waived and recovery stayed during pendency of the appeal. In default, the interim protection would stand vacated and the appeal would be liable to dismissal.

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