Duty-paid deeming fiction for aluminium scrap preserved exemption where Revenue could not prove non-duty-paid origin.

Aluminium circles made from waste and scrap of aluminium remained eligible for exemption under Notification No. 180/88-C.E. because the notification deemed aluminium and its products to be duty paid unless clearly recognisable as non-duty paid. Scrap used as input was treated as a product of aluminium for this purpose, so the Revenue had to prove that the scrap fell within the exception. On the facts relied on, that burden was not discharged, and the exemption continued to apply.

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Issues: Whether aluminium circles manufactured from waste and scrap of aluminium were entitled to exemption under Notification No. 180/88-C.E. dated 13-5-1988.

Analysis: The exemption applied where the inputs were goods falling under Chapter 76 on which duty had already been paid. The notification also contained a deeming explanation under which all stocks of aluminium and products thereof were to be treated as duty paid, except stocks clearly recognisable as non-duty paid. Aluminium waste and scrap was treated as a product of aluminium for this purpose, and the Revenue was required to show that the scrap used was clearly recognisable as non-duty paid. The circumstances relied on by the Revenue did not establish that the scrap was non-duty paid.

Conclusion: The exemption under Notification No. 180/88-C.E. remained available and the demand was not sustainable.

Final Conclusion: The Revenue failed to dislodge the assessee's entitlement to the exemption, and the appeal was rejected.

Ratio Decidendi: Where an exemption notification deems aluminium and its products to be duty paid unless clearly recognisable as non-duty paid, the Revenue must establish that the scrap used as input falls within that exception before denying the exemption.

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