Input credit under Heading 98.01 and bona fide belief justified waiver of balance pre-deposit and stay of recovery.

Heading 98.01 was treated as covering components and raw materials as well as capital goods, so Rule 57Q(3) did not clearly exclude credit otherwise available on inputs under Rule 57A. On that basis, a strong prima facie case was made for waiver of the balance pre-deposit where the credit had been claimed as input credit and had been taken for several years. The record also disclosed no clear allegation of suppression or misdeclaration, while import documents and returns had been furnished and earlier departmental orders supported bona fide belief. The material therefore justified waiver of further pre-deposit, stay of balance duty and penalty, and keeping recovery in abeyance.

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Issues: (i) Whether the applicant had made out a prima facie case for waiver of the balance pre-deposit on the question whether Rule 57Q(3) restricted credit on inputs imported under Heading 98.01, and (ii) whether the department had shown grounds to justify invocation of the extended period and insistence on further pre-deposit.

Issue (i): Whether the applicant had made out a prima facie case for waiver of the balance pre-deposit on the question whether Rule 57Q(3) restricted credit on inputs imported under Heading 98.01.

Analysis: Heading 98.01 covered not only capital goods but also components and raw materials. The goods in question were stated to be components or raw materials, and the credit had been taken under Rule 57A rather than as capital goods credit under Rule 57Q. On that footing, Rule 57Q(3) did not clearly exclude credit otherwise available on inputs under Rule 57A. The applicant had also been availing such credit for several years before capital goods credit was introduced.

Conclusion: The applicant established a strong prima facie case on merits, and waiver of the remaining pre-deposit was justified.

Issue (ii): Whether the department had shown grounds to justify invocation of the extended period and insistence on further pre-deposit.

Analysis: No clear allegation or discussion of suppression or misdeclaration was shown in the notice or the Commissioner's order. The record indicated that the import documents and returns had been furnished, and the applicant's view was supported by earlier orders of departmental authorities, which reinforced a bona fide belief. The material therefore did not justify treating the matter as one calling for a larger pre-deposit on limitation grounds.

Conclusion: The applicant also had a strong prima facie case on limitation, and no further deposit beyond the amount already made was required.

Final Conclusion: The balance duty and penalty were stayed, and recovery was kept in abeyance, with the appeal directed to be listed for hearing.

Ratio Decidendi: Where the dispute at the stage of waiver shows a plausible view that credit claimed on inputs is not prima facie governed by a restriction aimed at capital goods credit, and the record indicates bona fide belief without clear suppression, balance pre-deposit may be waived and recovery stayed.

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