Deemed credit presumption: department must prove the notification exception before denying credit on iron and steel inputs.

A notification granting deemed credit on re-rollable iron and steel products raised a presumption that the inputs were duty paid, and the assessee could rely on that presumption unless the department proved that the goods fell within the notification's exception. The department did not verify the duty-paid or non-duty-paid character of the inputs with Central Excise authorities and relied only on the assumption that goods received from manufacturers were non-duty-paid. On that basis, deemed credit was allowed, the statutory presumption was not displaced, and the appellate order was set aside with restoration of the original authority's order.

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Issues: Whether deemed credit was available on re-rollable iron and steel products received by the appellant under the relevant notification, and whether the department had proved that the inputs fell within the exception denying such credit.

Analysis: The notification granting deemed credit created a presumption that the procured goods were duty paid. Once such presumption operated, the burden lay on the department to show that the case was covered by the exception in the notification. No verification was made with the Central Excise authorities concerning the duty-paid or non-duty-paid nature of the inputs, and the department's assumption that receipt from manufacturers necessarily meant non-duty-paid goods was not supported by evidence.

Conclusion: Deemed credit was held to be available to the appellant, and the department failed to displace the statutory presumption.

Final Conclusion: The appellant succeeded on the credit issue, the order of the Commissioner (Appeals) was set aside, and the original authority's order was restored.

Ratio Decidendi: Where a notification grants deemed credit, the presumption operates in favour of the assessee that the goods are duty paid, and the department must affirmatively prove that the case falls within the notification's exception.

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