Prima facie exemption for captive consumption of PVC sheets supported waiver of pre-deposit and stay of recovery.

Prima facie relief was granted on a duty demand relating to captive use of PVC sheets in manufacturing PVC leather cloth, because earlier Tribunal decisions supported exemption under Notification No. 217/86. The Tribunal also noted that the show cause notice did not clearly set out a separate case that Modvat credit was legally restricted on the inputs, and the Commissioner's order did not address that issue. On that basis, immediate pre-deposit was not required and recovery was stayed.

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Issues: Whether pre-deposit of the duty demand should be waived and recovery stayed on the basis of the prima facie applicability of the exemption notification and the Tribunal's earlier view on captive consumption of PVC sheets in the manufacture of PVC leather cloth.

Analysis: The demand was founded on the allegation that the appellant ought to have availed exemption under Notification No. 217/86 for PVC sheets used captively in the manufacture of PVC leather cloth. The Tribunal found that the appellant's contention was supported by earlier Tribunal decisions on the same point. It further noted that the show cause notice did not clearly raise any demand on the separate basis that Modvat credit was restricted by law on the inputs in question, and the Commissioner's order did not address that aspect. On that prima facie view, the demand required no immediate pre-deposit.

Conclusion: Pre-deposit was waived and recovery of the duty demand was stayed.

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