Procedural exemption denied without factual verification cannot stand; remand ordered for fresh adjudication and evidence on export compliance.

Denial of the claimed procedural exemption could not be sustained where the factual basis for rejecting the assessee's defence was not established. The assessee asserted SSI status and contended that its home-consumption clearances were within the exemption limit, which would have relieved it from the AR-4 procedure under the Board circular. The record showed no finding on SSI eligibility or on whether the exemption threshold was crossed, and the assessee was not given a fair opportunity to produce proof of export or correlation of the goods. The impugned order was set aside and the matter remanded for fresh adjudication after allowing evidence to be produced.

---

---

Issues: Whether the order confirming duty and penalty for alleged non-compliance with the export procedure under the Central Excise Rules was sustainable, and whether the matter required remand to enable the assessee to produce evidence regarding export and eligibility to the benefit of the Board circular.

Analysis: The assessee raised a specific plea that it was a small scale industry and that its clearances for home consumption were within the exemption limit, so that it was not required to follow the AR-4 procedure under the Board's circular. No finding had been recorded on the assessee's SSI status or on whether the clearances for home consumption exceeded the exemption limit. The order also proceeded on the basis that proof of export had not been submitted, but the record did not show that a proper opportunity had been afforded to produce such proof and to establish correlation of the exported goods. In these circumstances, the defence required factual verification and an opportunity to adduce evidence in support of the reply to the show-cause notice.

Conclusion: The matter was required to be sent back for fresh adjudication after granting the assessee an opportunity to produce evidence in support of its defence; the impugned order was set aside.

Ratio Decidendi: Where the factual foundation for denial of a claimed procedural exemption is not established and the assessee has not been afforded a fair opportunity to produce supporting evidence, the order cannot be sustained and remand for fresh decision is warranted.

---