Deemed credit for re-rollers remains available after crossing the exemption threshold when duty-paid input documents are unavailable.

A re-roller entitled to exemption under Notification No. 1/93-C.E. could continue to avail deemed credit on re-rollable material bought from the open market without duty payment documents even after clearances crossed the exemption ceiling. The scheme was meant to address the practical difficulty faced by small scale manufacturers in proving duty-paid inputs, and that purpose was not lost merely because the exemption threshold was exceeded. The benefit remained available so long as the assessee continued to qualify as a re-roller entitled to the exemption, and the demand for duty-paying documents on that basis was not justified.

---

---

Issues: Whether a re-roller entitled to the exemption under Notification No. 1/93-C.E. could continue to avail deemed credit on re-rollable material purchased from the open market without producing duty payment documents even after clearances crossed the exemption limit.

Analysis: The deemed credit scheme was intended to relieve small scale manufacturers covered by Notification No. 1/93-C.E. from the practical difficulty of obtaining duty-paying documents for inputs obtained through the open market. The character of such manufacturers does not change merely because clearances exceed the exemption threshold. The purpose of the scheme therefore continues so long as the assessee remains a re-roller entitled to the exemption, and it would be artificial to withdraw the facility only after a particular value limit is crossed when the underlying difficulty remains the same.

Conclusion: The assessee was entitled to deemed credit even after crossing the exemption limit under Notification No. 1/93-C.E., and production of duty payment documents was not required on that ground.

Ratio Decidendi: A benefit designed to overcome the practical difficulty of small scale manufacturers in obtaining duty-paying documents cannot be denied merely because the exemption ceiling is crossed, where the assessee continues to be a manufacturer entitled to the exemption.

---