Burden to prove non-payment of duty rests on the department when denying a notified excise benefit on inputs or chassis.

A claimed differential excise duty benefit could not be denied merely because the assessee did not independently prove that the chassis had suffered duty. The department relied on gate passes and failed to investigate the suppliers' records or produce evidence of non-payment at the supplier end. The burden to establish that duty had not been paid lay on the department, and that burden was not discharged. In the absence of rebuttal evidence, the assessee remained entitled to the notified duty treatment.

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Issues: Whether the differential rate of duty under Notification No. 162/86-Central Excise dated 1-3-86 could be denied to the assessee on the ground that the duty-paid status of the chassis was not proved by the assessee.

Analysis: The impugned order was based on the gate passes produced by the assessee and on the finding that the Department had not conducted any investigation at the suppliers' end to verify whether duty on the chassis had been paid. The burden to establish non-payment of duty lay on the Department, and that burden had not been discharged. In the absence of evidence to rebut the assessee's claim, the lower authority was justified in refusing to recover duty from the assessee.

Conclusion: The assessee was entitled to the benefit of the claimed duty treatment, and the Revenue's challenge failed.

Ratio Decidendi: Where the Department seeks to deny a claimed duty benefit on the footing that the input or chassis did not suffer duty, the burden to prove such non-payment lies on the Department and cannot be shifted to the assessee without evidence.

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