Pre-deposit waiver for captively used chewing tobacco upheld on a strong prima facie case under Rule 9 proviso

Waiver of pre-deposit was sought on the basis that unbranded chewing tobacco manufactured in the appellants' own factory and captively consumed in making branded chewing tobacco prima facie fell within the third proviso to Rule 9. The Tribunal treated the dispute as one of interim relief only, held that the procedural objections raised under Notification No. 14/94 (N.T.) were not decisive for the stay request, and found that the statutory conditions for the proviso were prima facie satisfied. As the Commissioner had not given adequate reasons to deny that benefit, unconditional dispensation from pre-deposit of duty and penalty was granted pending appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit of the duty and penalty amounts on the strength of the third proviso to Rule 9.

Analysis: The application concerned only interim relief against pre-deposit. The appellants asserted that unbranded chewing tobacco manufactured in their own factory and captively consumed in the manufacture of branded chewing tobacco attracted the protection of the third proviso to Rule 9, and that the procedural requirements relied upon by the Commissioner were not relevant to their claim. The objection based on Notification No. 14/94 (N.T.) issued under Rule 56A was not accepted as decisive for the stay question. On the materials then before it, the Tribunal found that the conditions of the third proviso to Rule 9 were prima facie satisfied and that the Commissioner had not given adequate reasons for denying that benefit.

Conclusion: The appellants were held to have a strong prima facie case and were granted unconditional dispensation from pre-deposit of the duty and penalty amounts during pendency of the appeal.

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