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TMI Blog2025 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The clear case of the respondent is that it procured raw material for its unit i.e, crude menthe oil, from various suppliers in Lukcnow and, therefore, it was not for the respondent to further find out and inquire as to how and from whom the suppliers had procured the raw material. The Commissionerate has undoubtedly conducted an elaborate inquiry, but could only conclude that the farmers, whose names were appearing on the vouchers seized from the possession of M/s Sachin and Nitin Enterprises were non-existent. The Commissionerate has, thus, seriously doubted the procurement of raw material by the suppliers of the respondent - The Adjudicating Authority has also ignored the fact that the respondent had installed two DG sets of 125 KVA to supplement the power. The case was clearly set up by the respondent before the Adjudicating Authority, but the same was not enquired into or investigated and the Adjudicating Authority rather placed sole reliance upon the investigation conducted by the Commissionerate. The CESTAT has rightly not approved the manner in which the proceedings were conducted by the Adjudicating Authority. In reply to the show cause notice issued by the jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is not sustainable, without going into the facts of the case, emerged during investigation, searches of premises of concerned and follow up investigation of the case ? (iv) Whether the Tribunal is correct in allowing the relief when the party had indulged into fraud, wilfully suppressed/mis-declared the material facts and also resorted to issue invoice without manufacturing and passing the CENVAT Credit to downstream. (v) Whether the impugned order passed by the Tribunal is justified in accordance with the provisions of notification No. 56/2002-CE dated 14.11.2002 ? 3. Before we advert to the arguments advanced by the learned counsel appearing on both sides and proceed to determine the substantial questions of law framed by this Court, we deem it appropriate to allude to the factual antecedents leading to the filing of this appeal by the Revenue. 4. The respondent, having Central Excise Registration No. AABC6468GXMQQ3, was engaged in the manufacture of Menthol Flakes . It was entitled to and was availing the benefit of area based exemptions in terms of Notification No.56/2002-CE dated 14.11.2002 as amended. The respondent, during the relevant period i.e from Nov 2007 to March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which 45 books containing 100 vouchers each, showing different payments made to the farmers for the purchase of crude menthe oil, for the year 2007-08, were recovered. The farmers, who were named in the vouchers, and had allegedly supplied the crude mentha oil to M/s Sachin and Nitin Enterprises, were verified through jurisdictional officers of the Central Excise. The farmers randomly selected from the purchase vouchers were found non-existent. It is on the basis of this investigation conducted by the Commissionerate, the jurisdictional Commissioner concluded that the J K based units were not purchasing raw materials, so there was no question of manufacture of finished goods as had been shown by the respondent to avail the area-based exemptions. The jurisdictional Authority, thus, initiated the proceedings by issuing a show cause notice to the respondent, raising a demand for the duty refunded in terms of Notification dated 14.11.2002 (supra). 7. The Adjudicating Authority confirmed the demand on the ground that the farmers who had allegedly supplied the raw material i.e, mentha oil were, non-existent and that, in the absence of any supply of raw material, there was no manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent had submitted its reply clarifying its position, as is reproduced in paragraphs No. 5, 6 and 7 of the impugned order passed by the CESTAT. However, the same was neither referred to by the Adjudicating Authority, nor controverted by the Revenue department. He, therefore, submits that the CESTAT correctly appreciated the issue and came to the conclusion that there was no evidence on record proving that the respondent was not the manufacturer and had not produced the excisable goods during the relevant period. Consequently, the CESTAT held that there was no illegality or fraud committed by the respondent in availing the refund of excise duty paid by it on the removal of goods manufactured in its unit. 10. Having heard learned counsel for the parties and perused the material on record, we are of the considered opinion that the CESTAT has very correctly appreciated the entire controversy and has rightly concluded that the action of the appellant, based solely on the investigation conducted by the Commissionerate, was not sustainable in law. 11. With a view to deny the benefit of the exemptions envisaged under Excise Notification dated 14.11.2002(supra), the appellant was requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and fixed the capacity of the respondent, had regularly verified the purchase consignments. The Adjudicating Authority has also ignored the fact that the respondent had installed two DG sets of 125 KVA to supplement the power. The case was clearly set up by the respondent before the Adjudicating Authority, but the same was not enquired into or investigated and the Adjudicating Authority rather placed sole reliance upon the investigation conducted by the Commissionerate. The CESTAT has rightly not approved the manner in which the proceedings were conducted by the Adjudicating Authority. 13. We, at the cost of repetition, would say that with a view to claim payment of refund availed by the respondent under Notification dated 14.11.2002 (supra), it is necessary for the jurisdictional Excise Authority to establish the following: (i) That no raw material has been procured by the respondent; (ii) That the unit has not undertaken any manufacturing activity involving the use of raw material during the relevant period; (iii) That no excisable goods were removed by the respondent from the unit and that the refund was fraudulently claimed. 14. With a view to prove the aforesaid, an in-dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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