2023 (11) TMI 163 - AT - Central Excise

Benefit of exemption Notification No. 04/2006-CE dated 01.03.2006 (Sr. No. 90) denied - Kraft Paper - non-compliance with the condition that Kraft Paper is manufactured from the pulp stage - whole case of the department is that the appellant did not have the pulping machine - HELD THAT - The Adjudicating Authority has stated that on the visit of the Central Excise officer, it appeared that the noticee has not installed pulping machine in their premises during the relevant period. However, there is absolutely no evidence of visit of the Central Excise Officer as neither any documentary evidence nor panchnama was recorded about visit of the factory. Therefore, such observation of the Commissioner appears without any basis. Since the entire case is based on the assumption that the pulping machine was not installed but the department could not adduce any evidence to this allegation. The sole basis of the department to hold that the appellant did not have pulping machine is the correspondence made with the supplier of pulping machine but no reply was received from the pulping machine supplier - Merely because the department could not get the response that itself will not conclude that the appellant have not purchased the pulping machine. In this position, it was incumbent on the department to physically verify, whether the pulping machinery installed in the appellant s factory is of the relevant period which department failed to do such exercise. The appellant did have the pulping machine at the relevant time. However, since the revenue has not carried out any verification, one opportunity is given to the Revenue to conduct the detail verification that the pulping machine was installed at the relevant point of time in the factory of the appellant or otherwise. Thereafter, to pass a denovo speaking order in the present matter. Appeal is allowed by way of remand to the Adjudicating Authority for passing a fresh order within a period of two months from the date of this order, after following the principle of natural justice.

Summary

Issues Involved:
The issue involved in the present case is whether the appellant is eligible for exemption under Notification No. 04/2006-CE dated 01.03.2006 (Sr. No. 90) for Kraft Paper manufactured from the pulp stage.

Exemption Eligibility:
The department contended that the appellant did not have a pulping machine, thus the Kraft paper was not manufactured from the pulp stage, making them ineligible for exemption.

The appellant, supported by documentary evidence, argued that they had a pulping plant. They criticized the Adjudicating Authority for denying the exemption without basis, highlighting discrepancies in the findings.

Adjudicating Authority's Findings:
The Adjudicating Authority's order was based on presumption and lacked concrete evidence regarding the installation of the pulping machine in the factory premises during the relevant period.

The Revenue, represented by the Superintendent, reiterated the findings of the impugned order but failed to provide evidence supporting the Adjudicating Authority's claims.

Judicial Review:
Upon reviewing the submissions and records, it was noted that the department's case hinged on the absence of a pulping machine, rendering the appellant ineligible for the exemption.

The Adjudicating Authority's assertion of the pulping machine's non-installation lacked substantiation, as no concrete evidence of a visit by Central Excise officers or documentation of the alleged absence of the machine was presented.

Verification and Remand:
Considering the appellant's documentation, including the purchase invoice of the pulping machine and procurement of paper waste, it appeared that the goods were manufactured from the pulp stage.

The department's reliance on correspondence with the pulping machine supplier, without receiving a response after seven years, was deemed insufficient to prove the absence of the machine. The Revenue was given an opportunity to conduct a detailed verification and issue a fresh order within two months.

Conclusion:
The impugned order was set aside, and the appeal was allowed for remand to the Adjudicating Authority to issue a new order following the principles of natural justice within two months from the date of the decision.