Duty-paid steel scrap exemption applies even where scrap was misclassified, if the notification turns on duty leviable.

Exemption under Notification No. 42/74 applied to steel ingots manufactured from fresh unused duty-paid steel melting scrap, even though the scrap had been assessed under a higher excise classification. The notification was read by reference to the duty leviable on the scrap, not to classification under Item 26 alone, and the determining factor was proof that duty had in fact been paid. Departmental clarification supported this interpretation for scrap arising from products assessed under Item 26AA. Relief was therefore admissible to the extent of the correct duty relatable to the scrap used, with the refund quantum left for verification by the lower authorities.

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Issues: Whether steel ingots manufactured from fresh unused duty paid steel melting scrap were entitled to exemption under Notification No. 42/74 where the scrap had been assessed at a higher rate as products under Item 26AA, and whether refund of the consequential excess duty was admissible.

Analysis: The exemption under Notification No. 42/74 applied to steel ingots made from fresh unused duty paid steel melting scrap and used the expression "duty leviable", unlike Notification No. 66/73, which specifically tied exemption to scrap falling under Item 26. The Tribunal held that the wording of Notification No. 42/74 did not require the scrap to have been classified only under Item 26, and that what mattered was proof that duty had been paid on the scrap. It also relied on the departmental clarification that steel melting scrap arising from iron and steel products assessed under Item 26AA could still attract the correct deemed rate for the purpose of the notification. The appellants were therefore entitled to the benefit of the notification to the extent admissible on the correct duty relatable to the scrap used.

Conclusion: The claim for exemption under Notification No. 42/74 was allowed, and the authorities were directed to determine and refund the admissible amount.

Final Conclusion: The appellants succeeded in establishing entitlement to the notification-based relief for ingots manufactured from the relevant steel melting scrap, subject to verification of the refund quantum by the lower authorities.

Ratio Decidendi: An exemption for goods manufactured from duty paid scrap cannot be denied merely because the scrap was wrongly assessed under a higher excise classification, where the notification grants relief by reference to the duty leviable on the scrap and the manufacturer proves the requisite duty payment.

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