Exemption for DTA-cleared goods turns on proof of imported inputs; unsupported assumptions cannot justify denial of notification benefit.

Exemption under Notification No. 13/98-CE could not be denied merely on an assumed finding that DTA-cleared goods were made from both indigenous and imported raw materials. The earlier remand required proof of the actual source of inputs, but the denovo order recorded mixed use without supporting evidence. In the absence of evidence that imported raw material was used in the subject goods, the denial of exemption was unsustainable, and the benefit of doubt had to go to the appellant. The appellant was therefore entitled to the notification benefit, and the demand, penalty, and interest based on denial of that exemption could not stand.

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Issues: Whether the appellant was wrongly denied the benefit of Notification No. 13/98-CE on the ground that the DTA-cleared goods were manufactured from both indigenous and imported raw materials.

Analysis: The appeal turned on the source of the raw materials used in the manufacture of the DTA-cleared goods. The earlier remand required verification of whether the goods were manufactured from indigenous raw material, imported raw material, or both. In the denovo order, the finding that the goods were made from both sources was recorded without supporting evidence and was based on assumption. In the absence of proof that imported raw material was used in the subject goods, the denial of exemption could not be sustained. The benefit of doubt had to be given to the appellant.

Conclusion: The appellant was entitled to the benefit of Notification No. 13/98-CE and the demand, penalty, and interest founded on denial of that exemption could not stand.

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