SSI exemption dispute: demand failed where evidence did not prove manufacture of only stainless steel ingots instead of mild steel ingots.

Duty, interest and penalties on the allegation that the assessee manufactured stainless steel ingots and cleared them as mild steel ingots, thereby crossing the SSI exemption limit, were held unsustainable because the record showed MS scrap and machinery capable of manufacturing both MS and SS ingots, the buyers' statements did not prove receipt of only SS ingots, and the invoices referred to MS ingots. In the absence of corroborative evidence that only SS ingots were manufactured during the relevant period, the demand was treated as based on assumptions and presumption rather than proof, and the impugned order was set aside.

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Issues: Whether the duty demand, interest and penalties were sustainable on the allegation that the appellants manufactured stainless steel ingots and cleared them as mild steel ingots, thereby crossing the SSI exemption limit.

Analysis: The record showed the presence of MS scrap as well as machinery used for manufacture of both MS ingots and SS ingots. The buyers' statements did not establish that only SS ingots had been received, and the invoices were for MS ingots. In the absence of corroborative evidence proving that the appellants were manufacturing SS ingots only during the relevant period, the allegation rested on assumptions and presumptions. The allowance of credit on MS scrap also supported the view that MS ingot manufacture was taking place. A demand founded merely on suspicion could not be sustained.

Conclusion: The duty demand, interest and penalties were not sustainable and the impugned order was set aside.

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