2018 (11) TMI 220 - AT - Central Excise

Demand of Central excise duty - demand on the ground that activity amounting to manufacture which was exempted under Clause (c) of Sl. No. 30 of N/N. 25/2012-ST - assessing officer without going in to matter in detail passed the order - principles of natural justice - Held that - The assessing officer cannot conclude a proceeding based on his assumptions or presumptions; he has to weigh each case on the facts unearthed as a result of investigation. When there are allegations and counter-allegations, it is expected that a further investigation be done, to unearth the real facts. The assessing officer without any reference to any further investigation and by simply relying on the invoice which did not even specify whether they are manufacturing those items for the assessee alone, has concluded the proceedings to hold it against the assessee. It is a settled position of law that the jurisdiction of the Central Excise authorities is specific and equally so when it comes to the questioning of correctness, legality or otherwise of the tax paid by the service providers, by the Central Excise Officers having jurisdiction over the service recipients/assessees availing the credit. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of manufacturing activity at appellant's unit exempted under Notification No. 25/2012-ST.

The judgment pertains to an appeal by an appellant registered under Central Excise, engaged in manufacturing plastic articles. A Show Cause Notice alleged manufacturing activity at the appellant's unit, exempted under a specific notification, demanding duty, interest, and penalty. The Order-in-Original confirmed the duty, interest, and penalty, as the appellant failed to prove no manufacturing occurred at the job worker's premises. The appellant, unsuccessful in the first appeal, filed this appeal.

During the hearing, the appellant's advocate argued that the demand was based on treating job work as manufacturing, exempt from service tax. She contended that the principal manufacturer could avail duty credit paid by the job worker, citing relevant decisions and a recent High Court judgment. The Revenue's representative supported the lower authorities' findings.

The tribunal considered the contentions, reviewed the documents, and analyzed the Orders/judgments referenced. It noted the allegation that the appellant's unit conducted intermediate production as job work, countered by the appellant claiming further manufacturing at a different unit. The tribunal found discrepancies in the authorities' conclusions, emphasizing the need for thorough investigation before reaching decisions based on assumptions. It highlighted the specific jurisdiction of Central Excise authorities in questioning tax payments by service providers.

Ultimately, the tribunal concluded that the demand sustained by the Commissioner (Appeals) was incorrect and unsustainable based on legal precedents. As a result, the tribunal allowed the appeal, setting aside the demand, and providing consequential reliefs as per the law. The operative part of the order was pronounced in open court.