Conditional exemption cannot be denied on presumptions when separate records support compliance with the prescribed notification requirements.

Exemption under a conditional notification cannot be denied on mere presumptions where the factual record shows compliance with the prescribed requirement of maintaining separate accounts or records. The adjudicating authority had found, on the evidence, that separate production records for exempted goods were maintained and that the Board's circular requirement was satisfied. The appellate reversal, based on assumptions about non-maintenance of books and possible credit use for exempt clearances, did not displace that factual finding. The denial of exemption was therefore unsustainable, and the assessee remained entitled to the benefit of Notification No. 30/2004-C.E., with restoration of the dropped demand and consequential relief.

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Issues: Whether the assessee was entitled to exemption under Notification No. 30/2004-C.E. despite availing credit on inputs for dutiable goods and maintaining separate records for exempted clearances as required by the Board's circular.

Analysis: The Original Adjudicating Authority had examined the clearances, inputs and outputs and had recorded a factual finding that the production register for exempted goods was maintained separately, thereby satisfying the requirement of the Board's circular. The appellate finding denying exemption proceeded on assumptions that separate books of account were not maintained and that credit might have been taken on inputs used for exempted goods, without effectively examining the evidence or showing why the factual conclusion of the original authority was incorrect.

Conclusion: The denial of exemption was not sustainable, and the assessee was held entitled to the benefit of Notification No. 30/2004-C.E.

Final Conclusion: The original adjudication restoring the exemption and dropping the demand was reinstated, with consequential relief to the assessee.

Ratio Decidendi: Exemption under a conditional notification cannot be denied on mere presumptions when the factual record supports compliance with the prescribed requirement of maintaining separate accounts or records and the contrary finding is unsupported by evidence.

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