2024 (9) TMI 310 - AT - Central Excise

Benefit of N/N. 2/95-CE dated 04.01.1995 - manufacturing of goods, which were cleared in DTA, out of indigenous or imported raw material - deemed export' effected by the noticee is at par with the 'physical export in terms of Para 9.9(b) of the said Exim Policy 1997-2002 or not - appellant argued right from beginning that the goods in question is manufactured out of indigenous raw material. HELD THAT - This Tribunal in the first round of litigation remanded the matter to the Adjudicating Authority reported at PRIME POLY WEAVE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-I 2005 (7) TMI 404 - CESTAT, MUMBAI where the Tribunal has held that 'we would remand the question of shortages accounting thereof consequent duties, if any, and penalties in this case also open in the now being ordered for both sides de novo proceedings.' Since there was no evidence that the subject goods were manufactured out of imported goods, the matter was remanded with a specific direction to the Adjudicating Authority to establish that the goods were manufactured out of indigenous raw material and/ or imported raw material. The Adjudicating Authority in denovo adjudication, without having any evidence on record to this aspect came to the conclusion that the goods were manufacture out of indigenous as well as imported raw materials. On going through the show cause notice wherein the allegation of manufacture of subject goods out of indigenous and imported raw material is bald and on assumption and the same is not based on any evidence. Therefore, despite remand the matter to establish this fact, the Adjudicating Authority has decided the source of raw material only on the assumptions. Therefore, in these peculiar facts, the benefit of doubt clearly goes in favour of the appellant. Accordingly, in the absence of any evidence that the imported raw material was used in the subject goods, the appellant cannot be denied of exemption Notification No. 13/98-CE in respect of DTA clearances. The impugned order is set aside - appeal allowed.

Summary

Issues:
Confirmation of differential Central Excise duty
Imposition of penalty and interest
Rejection of Customs Duty demand on raw material
Eligibility for concessional rate of duty under Notification No. 13/98-CE

Analysis:
The judgment concerns an appeal against an order-in-remand where the Commissioner confirmed the demand of differential Central Excise duty on the appellant. The Commissioner also imposed a penalty and ordered interest to be recovered from the appellant. However, the demand for Customs Duty on raw material was rejected. The core issue revolved around whether the goods cleared in the Domestic Tariff Area (DTA) were manufactured using indigenous or imported raw materials. The appellant contended that the goods were produced using indigenous raw materials. The Tribunal referred to a previous order that highlighted the importance of verifying the source of raw materials. The Adjudicating Authority observed that the appellant had used both indigenous and imported raw materials, thus denying them the benefit of concessional duty under Notification No. 13/98-CE. The Tribunal found that the Adjudicating Authority had made assumptions without concrete evidence regarding the source of raw materials. As a result, the Tribunal ruled in favor of the appellant, stating that the benefit of doubt should be in their favor, especially in the absence of evidence proving the use of imported raw materials in the subject goods. Consequently, the impugned order was set aside, and the appeal was allowed.