Primarily and substantially knitting exemption interpreted broadly, with a major part of the demand treated as time-barred.

The amended exemption for units whose activity was primarily and substantially knitting was read as not requiring the processing unit to deal only with fabrics from a knitting unit in which it had a proprietary interest; the relevant test was whether the manufacturer's activity itself was primarily and substantially knitting. The record also showed that a major part of the duty demand was time-barred, supporting waiver of pre-deposit of duty and penalty and listing of the matter for regular hearing.

---

---

Issues: Whether, for the purpose of waiver of pre-deposit, the applicant had made out a prima facie case that its processing activity was covered by the amended exemption relating to units whose activity was primarily and substantially knitting, and whether the demand was also affected by limitation.

Analysis: The dispute turned on the meaning of the expression "primarily and substantially" in the exemption notification. It was found that the notification did not require the processing unit to process only the fabrics of the knitting unit in which the applicant had proprietary interest; the relevant requirement was that the manufacturer's activity should primarily and substantially be knitting activity. The record also indicated that a major portion of the demand was time-barred.

Outcome: Pre-deposit of duty and penalty was waived and the matter was directed to be listed for regular hearing.

---