Marketability and burden of proof defeated duty demand on crushed Leco waste; procedural permission lapse held non-fatal.

Duty on crushed Leco waste was held unsustainable because the Revenue failed to prove that the waste was marketable or otherwise dutiable. Since the entire Leco input had to be crushed before use in Ferro Alloys manufacture, the burden remained on the Revenue to establish dutiability, and that burden was not discharged. In the absence of proof of dutiability, prior permission for clearance without duty under the relevant credit and exemption scheme was unnecessary. Non-obtaining of such permission was treated as only a procedural lapse causing no revenue loss, so the demand failed and consequential relief followed.

---

---

Issues: Whether the demand of duty arising from the crushed Leco waste was sustainable when the Revenue failed to prove that the waste was marketable and dutiable, and whether absence of permission for clearance without duty was only a procedural lapse.

Analysis: The entire Leco input had to be crushed before use in the manufacture of Ferro Alloys, and the Revenue did not adduce evidence to show that the resulting waste was marketable or otherwise dutiable. The burden to establish dutiability lay on the Revenue. In the absence of proof of dutiability, the requirement of permission for clearance without duty under the relevant credit and exemption scheme did not arise. The failure to take such permission was, at most, a minor procedural infraction that caused no loss of revenue.

Conclusion: The demand was not sustainable and the appeal was allowed with consequential relief.

---