2017 (11) TMI 275 - AT - Central Excise

Exemption under N/N. 8/96-CE dated 23/07/1996 as amended by N/N. 28/96-CE dated 11/09/1996 - case of the department is that the respondents have used less than 75% of the weight of the pulp made from non-conventional raw materials - Held that - the department conclusively failed to provide the documents seized from the respondents. In such case, the respondent cannot make an effective defence or justify whether non-conventional raw materials was less than 75% or more than 75%. If the relied upon documents could not be produced by the department, no proceedings can be made against the respondents, irrespective of fact whether the appellant has manipulated the records or otherwise - the Ld. Commissioner has dropped the demand on the ground of time bar by giving a very reasoned finding that all the records were being maintained by the respondents and the department was not prevented to verify such records from time to time, particularly when the respondent was claiming the exemption notification. Therefore, the dropping of demand on time bar also found to be correct and legal - appeal dismissed - decided against Revenue.

Summary

Issues: Eligibility for concessional rate of duty under Notification No.8/96-CE dated 23/07/1996 as amended by Notification No.28/96-CE dated 11/09/1996.

Analysis:
The primary issue before the Bench was the eligibility of the appellant for the concessional rate of duty under the specified notifications. The notification required that the article in question must be manufactured starting from the stage of pulp in a factory, with the pulp containing not less than 75% by weight of pulp made from specific non-conventional raw materials. The department alleged that the appellant did not meet this requirement, leading to a show-cause notice for differential duty. The adjudicating authority initially dropped the demand citing time bar and lack of document provision to the respondents. However, the Revenue appealed against this decision, arguing non-compliance with the notification condition.

The Revenue contended that the appellant failed to meet the 75% threshold of non-conventional raw materials in the pulp, thus rendering them ineligible for the concession. The Revenue emphasized that the investigating officers found discrepancies in this regard, justifying the demand for differential duty. Despite the absence of representation from the respondents, the Revenue pressed on the non-compliance issue, urging the Tribunal to overturn the order-in-original that favored the appellant.

Upon careful consideration, the Tribunal observed that the appellant availed the exemption under the notification, paying duty at a concessional rate and maintaining requisite records. However, the investigating officers withdrew crucial documents during the process. The Tribunal noted that the department's failure to provide these documents to the respondents hindered their ability to defend against the allegations effectively. This lack of document provision violated the principles of natural justice, a fundamental requirement in legal proceedings. The Tribunal highlighted that without access to the withdrawn documents, the respondents could not substantiate whether they met the 75% threshold of non-conventional raw materials. Consequently, the Tribunal upheld the adjudicating authority's decision to drop the proceedings, emphasizing the importance of natural justice principles.

In addition to the natural justice aspect, the Tribunal upheld the dropping of the demand on grounds of time bar. It reasoned that since the appellant maintained all necessary records and the department had the opportunity to verify them periodically, the demand was rightfully considered time-barred. The Tribunal emphasized that maintaining the integrity of legal proceedings, including adherence to time limits and the provision of essential documents, was crucial in upholding fairness and justice. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the decision in favor of the appellant.