Deemed credit on market-purchased scrap requires proof of non-duty-paid character; conjecture alone cannot justify denial of interim relief.

Deemed credit for iron and steel scrap bought from the market cannot be denied on conjecture alone; the Department must establish that the goods were obtained directly from a factory after availing exemption and were therefore non-duty-paid. Where the assessee gives a definite factual stand and files supporting documents, the authority must test the evidence and record a finding on admissibility before refusing interim relief. On the facts noted, the Tribunal found a strong prima facie case and granted waiver of pre-deposit, with recovery stayed pending appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit of duty and stay of recovery pending appeal.

Analysis: The application concerned admissibility of deemed credit in respect of iron and steel scrap purchased from the market. The Tribunal noted that, in market purchases, the Department must establish that the goods were obtained directly from a factory after availing exemption, and a mere possibility of exemption does not by itself show non-duty-paid character. It further noted that the appellants had taken a definite stand as to the nature of the inputs and had filed supporting documents. In these circumstances, the Collector was required to test the evidence and record a finding on admissibility, which had not been done at this stage.

Conclusion: The appellants were held to have made out a strong prima facie case for interim relief.

Final Conclusion: The requirement of pre-deposit was waived and recovery was stayed during pendency of the appeal.

Ratio Decidendi: In market-purchase cases, deemed credit cannot be denied merely on conjecture; the Department must establish the non-duty-paid character of the goods, and interim relief is justified where the assessee has produced a definite factual stand and supporting evidence.

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