Nil-rate scrap can satisfy the duty-paid condition under an exemption notification when the settled interpretation treats it as appropriate duty.

An exemption notification for castings was construed to treat scrap cleared at nil rate of duty as satisfying the duty-paid or appropriate-duty condition, provided the prescribed credit was not taken. The analysis follows the settled interpretation that "appropriate amount of duty" does not exclude nil-duty clearances and notes that the same reading had already been accepted under an identical notification. A departmental circular was cited as supporting that understanding, so the exemption remained available on nil-rate scrap clearance.

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Issues: Whether scrap cleared at nil rate of duty could be treated as duty paid or as having suffered appropriate duty for the purposes of the exemption notification governing castings.

Analysis: The exemption required that the inputs used in manufacture must have suffered duty and that no credit should have been taken under the relevant credit rules. The Tribunal relied on the settled view that the expression "appropriate amount of duty" does not exclude goods cleared at nil rate of duty. It also noted that under the identical notification, nil-duty clearance had already been recognised as satisfying the duty-paid condition. The department's own clarification in the cited circular supported the same understanding.

Conclusion: Nil-rate clearance of the scrap satisfied the duty-paid condition in the exemption notification. The exemption was available and the revenue appeal failed.

Final Conclusion: The impugned order was sustained and the revenue's challenge was rejected.

Ratio Decidendi: Where an exemption notification requires inputs to have suffered duty, goods cleared at nil rate may still satisfy that requirement if the governing legal interpretation treats nil-duty clearance as discharge of the duty-paid or appropriate-duty condition.

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