Duty-paid scrap presumption supports exemption for aluminium alloy ingots made from open-market aluminium waste and scrap.

Aluminium alloy ingots manufactured from aluminium waste and scrap bought in the open market were treated as eligible for exemption under Notification No. 180/88-CE because the exemption applied where Chapter 76 goods were duty paid, and the explanation deemed aluminium stocks duty paid unless clearly recognizable as non-duty paid. The mere fact that aluminium waste and scrap was generally covered by Notification No. 182/84-CE did not prove that every market purchase was non-duty paid. In the absence of documentary evidence linking the scrap to a clearly non-duty paid source, the deeming provision operated in favour of the assessee, and the demand was unsustainable.

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Issues: Whether aluminium alloy ingots manufactured from aluminium waste and scrap purchased from the open market were eligible for exemption under Notification No. 180/88-CE, when the Revenue treated the scrap as non-duty paid on the basis of Notification No. 182/84-CE.

Analysis: The exemption under Notification No. 180/88-CE was subject to the condition that the goods be manufactured from Chapter 76 goods on which duty had already been paid, but the accompanying explanation deemed all stocks of aluminium and products thereof to be duty paid except stocks clearly recognizable as non-duty paid. The fact that aluminium waste and scrap was generally covered by Notification No. 182/84-CE did not by itself establish that every scrap in the market was non-duty paid. Scrap purchased from the open market could not be linked to a particular exempt clearances chain, and in the absence of documentary evidence showing that it was clearly non-duty paid, the statutory deeming provision had to operate in favour of the assessee.

Conclusion: The exemption under Notification No. 180/88-CE was available and the demand was unsustainable.

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