Duty exemption for scrap fails when the input molten iron was not duty-paid under the notification conditions.

Scrap iron and steel melting scrap is exempt only where it is obtained from iron in crude form, steel ingots, or iron or steel products that have already suffered the appropriate duty. Where the assessee received molten iron from another factory and that molten iron had not been duty-paid, the condition attached to Notification No. 54/64-C.E. was not satisfied. The exemption had to be tested with reference to the assessee's own receipt of duty-paid material, so removal of the resulting scrap without duty was not permissible.

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Issues: Whether the appellants were entitled to remove scrap without payment of duty under Notification No. 54/64-C.E. dated 1-3-1964 when the molten iron received by them was not duty-paid.

Analysis: The notification exempted scrap iron and steel melting scrap obtained in the manufacture of iron and steel products from iron in any crude form, steel ingots, or iron or steel products that had already suffered the appropriate duty. The material received by the appellants was molten iron from another factory and it was admitted that such molten iron had not suffered duty. The benefit of the notification had to be considered with reference to the assessee and the scrap had to be generated out of duty-paid materials received by the assessee. Since the input received by the appellants was not duty-paid, the condition of the notification was not satisfied.

Conclusion: The appellants were not entitled to exemption under Notification No. 54/64-C.E. and the claim for removal of scrap without payment of duty failed.

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