Duty-paid old aluminium scrap exemption sustained for castings made from ingots cleared at nil duty.

Aluminium castings made from ingots produced from old aluminium scrap qualified for exemption under Notification No. 43/75 because the scrap had already suffered duty. Nil-rate clearance of the ingots did not alter their character as excisable goods, and exempted goods do not cease to be excisable merely because duty is waived. The notification was construed liberally to advance its object of encouraging use of old aluminium scrap. On that basis, the castings were held entitled to the exemption and the demand could not stand.

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Issues: Whether aluminium castings manufactured from aluminium ingots, where the ingots were produced from old aluminium scrap, were eligible for exemption under Notification No. 43/75 dated 1-3-1975.

Analysis: The exemption notification applied to aluminium in crude form and castings, subject to the condition that the material was manufactured from old aluminium scrap and that such scrap had already suffered duty. The factual finding recorded below was that the scrap used in the chain of manufacture was duty-paid, and the ingots supplied to the assessee were cleared under the notification at nil rate of duty. Nil duty is still a duty rate, and exempted goods do not cease to be excisable merely because the notification grants exemption. The notification was intended to encourage secondary users of old aluminium scrap, and it had to be construed liberally so as to give effect to that object. Since the castings were manufactured from ingots derived from duty-paid old aluminium scrap, the assessee's claim to the exemption was sustained.

Conclusion: The aluminium castings were entitled to the benefit of Notification No. 43/75, and the demand could not stand.

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