Strict construction of exemption notification: scrap qualifies only if prior duty payment on input goods is affirmatively proved.

An exemption under Notification No. 171/88 for waste and scrap arising from manufacture applied only where the underlying input goods were affirmatively shown to have suffered excise duty or additional customs duty. The notification had to be construed strictly, and no deeming provision could be implied to treat all market goods as duty paid. Because entitlement depended on proof of prior duty payment on the steel sheets used in manufacture, the remand for a factual determination on that point was upheld and the assessee was not shown to qualify for the exemption without such proof.

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Issues: Whether the assessee was entitled to exemption under Notification No. 171/88 for scrap arising from manufacture of components of internal combustion engines, where duty-paid status of the input steel sheets was not established.

Analysis: The exemption covered waste and scrap arising out of goods on which excise duty or additional customs duty had already been paid. The notification was required to be construed strictly, and no deeming provision could be read into it to treat all market goods as duty paid. Since the benefit depended on proof that the scrap arose from goods on which duty had in fact been paid, the authority was justified in directing a factual determination on that aspect.

Conclusion: The assessee was not shown to be entitled to the exemption without proof of duty payment on the input sheets, and the remand for such determination was upheld.

Ratio Decidendi: An exemption notification conditioned on prior payment of duty applies only when that condition is affirmatively established, and no presumption of duty-paid character can be imported in the absence of an express deeming provision.

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