2019 (5) TMI 1342 - AT - Central Excise

Refund of duty paid - no manufacturing activity taking place - fake supplier - demand based on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of power by the appellants - HELD THAT - As the allegations made in the show cause notice are vague and on assumption and presumption, without any cogent evidence. On the contrary, the appellant has produced enough evidence to show that the appellant has manufactured goods and paid the duty by availing the benefit of Notification No. 56/2002-CE dated 14.11.2002. No proceedings are sustainable against the appellants - Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of non-existence of farmers supplying raw material, denial of cenvat credit, demand of duty refund, sustainability of proceedings against the appellant.

In this judgment by the Appellate Tribunal CESTAT CHANDIGARH, the appellant appealed against an impugned order issued by the Merrut Commissionerate following an investigation into the purchase of Menthol Solution and Dementholised Oil from Jammu & Kashmir based units. The investigation revealed that commission agents were not maintaining proper records and farmers supplying raw material were non-existent. Consequently, show cause notices were issued to UP based manufacturers to deny cenvat credit and to J&K based manufacturers for duty refund. The adjudicating authority confirmed the demand based on lack of evidence of raw material supply and manufacturing activity by the appellant. The appellant argued that evidence such as truck consignments, reports from various departments, and inspections proved their manufacturing activities and receipt of raw materials. The Tribunal referred to a previous case and observed that the investigation's allegations were not sustainable as evidence showed the movement of raw materials and finished goods. The Tribunal also highlighted reports confirming manufacturing activities and visits by officials to the appellant's factory. The judgment emphasized that without concrete evidence, the proceedings against the appellant were not sustainable, and the show cause notice was based on assumption and presumption. Therefore, the appellant was entitled to the benefit of an exemption notification and duty refund. Consequently, the impugned order was set aside, and the appeal was allowed.

The judgment addressed the issues of non-existence of farmers supplying raw material, denial of cenvat credit, demand of duty refund, and the sustainability of proceedings against the appellant. It highlighted the evidence presented by the appellant to prove manufacturing activities and payment of duty, ultimately leading to the decision in favor of the appellant based on lack of concrete evidence against them.