2017 (4) TMI 13 - AT - Customs

N/N. 203/92-Cus., dated 19-5-1992 - contravention of the Condition No. V(A) of the notification by availing Modvat Credit - validity of SCN - Held that - the SCN denying the exemption N/N. 203/92-Cus. was issued without support of any evidence that whether the respondent has availed the MODVAT credit u/r 57A or otherwise. Therefore, the learned Commissioner has rightly dropped the proceedings on the ground that SCN cannot be issued on presumption and assumption. The allegation of SCN should be supported by documentary evidence which was not done so while issuing SCN - it is not permissible in law to issue a blanket SCN without the support of any evidence - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against Order-in-Original denying exemption under Notification No. 203/92-Cus. based on alleged violation of Condition V(A) regarding MODVAT credit under Rule 57A.

Analysis:
The appeal was filed by the Revenue challenging the Order-in-Original passed by the Commissioner of Customs (Export), ACC, Mumbai. The respondent was issued a show cause notice for denying exemption under Notification No. 203/92-Cus. The adjudicating authority dropped the proceedings citing lack of evidence regarding the alleged violation of Condition V(A) of the notification related to MODVAT credit under Rule 57A. The Commissioner held that duty cannot be demanded based on presumption alone, referencing a previous Tribunal judgment. The Revenue contended that the authority should have verified MODVAT credit with the Central Excise Authorities before dropping the demand.

Upon review, the Appellate Tribunal found that the show cause notice lacked evidential support regarding the respondent's availing of MODVAT credit under Rule 57A. The Tribunal agreed with the Commissioner that issuing a show cause notice without supporting evidence is impermissible in law. Citing the Tribunal's previous order, the Tribunal upheld the decision to drop the charges in the show cause notice. The Tribunal emphasized the necessity of a basis for issuing a notice and the importance of evidence to support allegations. As the department failed to provide evidence of MODVAT credit availed by the respondent, the Tribunal dismissed the Revenue's appeal, affirming the impugned order.

In conclusion, the Tribunal upheld the decision of the Commissioner to drop the charges due to lack of evidence supporting the show cause notice. The Tribunal emphasized the requirement of evidential support for allegations and the impermissibility of issuing notices based solely on presumption. The impugned order was upheld, and the Revenue's appeal was dismissed.