2025-VIL-03-J&K-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Area-based exemption - Respondent-assessee was engaged in the manufacture of "Menthol Flakes" and was entitled to and availing the benefit of Area-based exemptions in terms of Notification No.56/2002-CE dated 14.11.2002 - Respondent procured raw material i.e crude mentha oil against invoices from various suppliers and claimed refund/self-credit of duty paid through PLA under the self credit option – Dept investigation concluded that the respondent adopted a modus operandi of showing production and clearance of excisable goods without actually manufacturing, thus, misused the provisions of exemption Notification dated 14.11.2002 - Whether the Tribunal can ignore the investigations conducted and statements and allowing the appeal of the respondent without going into the facts of the case, emerged during investigation, searches of premises of concerned and follow up investigation of the case - HELD - The CESTAT has rightly observed that the entire case of the Revenue-appellant against the respondent is based upon the investigation conducted by the Commissionerate from the farmers who allegedly supplied the crude mentha oil to some of the suppliers of the respondent - The CESTAT has correctly appreciated that the Commissionerate has undoubtedly conducted an elaborate inquiry, but could only conclude that the farmers were non-existent – Further, the CESTAT has rightly taken note of the fact that most of the consignments of the raw material procured by the respondent were entered at the toll barrier and the officers of the District Industries Centre, who had assessed and fixed the capacity of the respondent, had regularly verified the purchase consignments - The Adjudicating Authority has ignored the fact that the respondent had installed two DG sets to supplement the power, which clearly demonstrated that the unit was functional and engaged in manufacturing activity. The CESTAT has rightly concluded that the investigation conducted by the Commissionerate could, at the most, be taken as a prima facie material to initiate action against the respondent, but any action, to be taken against the respondent, must satisfy the requirements of law and, in particular, the compliance with the principles of natural justice - The appeal of the Revenue is dismissed, however, the Authority concerned is open to conduct a fresh investigation in the matter in consonance with the principles of natural justice and in accordance with law. The Authority may take appropriate action against the respondent if it is found to have indulged in any malpractices leading to a fraudulent refund of excise duty paid allegedly on the excisable goods removed from its unit - The Revenue appeal is dismissed
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