The burden of proof regarding duty paid character of goods for availing modvat credit lies on the revenue and not on the assessee.

Mehinder Singh Sullar, J.

1. As common question of law and facts are involved in both the aforementioned reference petitions, therefore, we propose to decide the same, vide this single judgment, in order to avoid the repetition. However, for facilitation, the facts have been extracted from GCR No. 18 of 2004 titled as

#28;Commissioner of Central Excise, Chandigarh v. Khalsa Charan Singh and Sons#29;.

2. The matrix of facts, culminating in the commencement, relevant for disposal, of present reference petitions and emanating from the record is that the respondent-assessee M/s. Khalsa Charan Singh and sons (for brevity #28;the assessee#29;) was dealing in old rollable material/re-rollable material and scrap. A show cause notice was issued to the assessee, proposing to deny proforma credit availed by it under the modvat scheme, on the ground that as the #28;old rollable material/re-rollable material and scrap#29; is not specified in the Government of India#25;s Order No. B-22/5/86- TRU, dated 7-4-1986, therefore, it (assessee) is not entitled to modvat credit without production of evidence of payment of duty. The Assistant Commissioner, Central Excise denied the proforma credit to the assessee, vide order dated 12-11-1987. The Commissioner (Appeals) also upheld the order of Adjudicating Authority, vide order dated 31-10-1988.

3. Aggrieved by the aforesaid orders, the assessee filed the appeal before the Customs, Excise & Service Tax Appellate Tribunal. While relying on its earlier Final Order No. E/14-24/98, dated 6-1-1998 [1998 (98) E.L.T. 366 (Tribunal)]. The Tribunal accepted the appeal, vide order dated 21-1-1998, the operative part of which is reproduced as under :-

#28;The Tribunal has noted that type of goods were such as were not clearly classifiable under any of the excluded hearings in Government of India#25;s order dated 7-4-86. The Government of India#25;s order clearly indicates that goods purchased from outside and lying in stock on or after 1986 with the manufacturer manufacturing final products specified in Notification 177/88 dated 1-3-88 are deemed to have paid the specified duty at the specified rate. The only exceptions to this presumption were that (i) duty payment would not be presumed in case credit of specified duty had already been availed of under any rule or notification, (ii) such inputs were clearly recognizable as non-duty paid or charged to nil rate of duty or (iii) inputs as such where reduction of duty as has been provided under Notification No. 55/86 dated 10-2-86 has been claimed and documentary evidence exist to show that reduced duty has been paid on such inputs. In such cases, only actual duty paid could be allowed. Revenue has not led any evidence to prove that these exceptions were attracted in the case of the impugned goods. Therefore, the burden of establishing duty paid character cannot be passed on to the Appellants herein. Further, the dispute of duty paid character of the goods has been raised by the Revenue and if the Revenue has any doubt about the duty paid character of the goods, the burden to prove so rests squarely on the Revenue. The Tribunal also observed that it was not the contention of the Revenue that the disputed goods were otherwise covered by a unconditional exemption in the sense that those were wholly exempted. It was also not the contention of the Revenue that the goods have actually come from the factory after availing exemption. In the present case, the goods have come from the dealers and the Revenue has not led any evidence that dealers obtained goods under exemption. In these circumstances, the onus is clearly on the department, since this onus has not been discharged, the burden of proving duty paid character cannot be passed on to the Appellants herein who have taken a definite stand in regard to nature of goods that they are of duty paid character.#28;

4. In the wake of order dated 25-3-2003 of this Court in Applications No. 69 and 72/2002 (O&M), the T