Duty exemption for M.S. Bars: Revenue must prove ship-breaking scrap was non-duty-paid before denying Notification No. 208/83 benefit.

M.S. Bars manufactured from ship-breaking scrap were considered for central excise duty under Notification No. 208/83, with the Revenue contending that the scrap was non-duty-paid and therefore outside the exemption. The decisive point was evidentiary: the show cause notice and record did not establish that the input scrap had not suffered duty, and the burden remained on the Revenue to prove that the inputs were clearly identifiable as non-duty-paid. In the absence of such proof, and consistent with an earlier co-ordinate Bench view on the same issue, the duty demand was held not sustainable.

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Issues: Whether M.S. Bars manufactured from ship breaking scrap were liable to central excise duty when the Revenue alleged that the scrap was non-duty-paid and therefore outside the benefit of Notification No. 208/83.

Analysis: The Revenue's case rested on the assertion that the ship breaking scrap used as input had not suffered duty, but the show cause notice and record did not contain evidence establishing that fact. The burden lay on the Revenue to prove that the inputs were clearly identifiable as non-duty-paid. A co-ordinate Bench had already taken the same view on an identical issue, and there was no contrary material to depart from that reasoning.

Conclusion: The duty demand on the M.S. Bars was not sustainable and the Revenue's appeal was rejected.

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