Burden of proof for input stage credit denial under customs exemption rests on the Revenue when non-availment is prima facie shown.

Exemption under Notification No. 203/92-Cus was held not deniable merely because input stage credit was alleged to have been taken on goods used for export manufacture. The appellant's merchant-manufacturer status was supported by a certificate and was not disputed, while the supporting manufacturer was found to be operating under Notification No. 16/93. On these facts, the appellant discharged the initial burden of showing non-availment of credit, and the Revenue failed to produce documentary evidence proving actual availment by either party. The denial of exemption was therefore unsustainable.

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Issues: Whether the benefit of Notification No.203/92-Cus was deniable on the ground that input stage credit had been availed on the imported goods used for export manufacture, and whether the burden to prove such availment lay on the Revenue.

Analysis: The appellant's status as a merchant manufacturer was supported by a certificate issued by the Divisional Deputy Commissioner and was not disputed in adjudication. The record also showed that the supporting manufacturer was operating under Notification No.16/93 and, on the facts found, the question of central excise registration did not arise. The appellant therefore discharged the initial onus to show that no input stage credit had been availed. The Tribunal further relied on the principle that the burden to establish availment of input stage credit, when alleged as a ground to deny exemption, lies on the Revenue. No documentary evidence was produced to show that either the appellant or the supporting manufacturer had taken such credit.

Conclusion: The denial of exemption was unsustainable. The impugned order was set aside and the appeal was allowed in favour of the assessee.

Ratio Decidendi: When exemption is denied on the allegation of availed input stage credit, the assessee's prima facie evidence of non-availment shifts the burden to the Revenue to prove actual availment.

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