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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) whether the Revenue could sustain the demand for denial of concessional duty under Notification No. 8/96-CE, as amended, when the relied upon documents were not supplied to the assessee; (ii) whether the demand was otherwise barred by limitation.
Issue (i): whether the Revenue could sustain the demand for denial of concessional duty under Notification No. 8/96-CE, as amended, when the relied upon documents were not supplied to the assessee.
Analysis: The concessional notification was conditional upon fulfilment of the prescribed raw-material composition. The assessee's records, which were necessary to verify compliance, had been taken by the department. The adjudicating authority recorded that the department failed to produce the seized documents, leaving the assessee unable to meet the allegation or establish the actual composition. A demand founded on material not disclosed to the assessee cannot be sustained, as it violates the principles of natural justice.
Conclusion: The denial of exemption could not be sustained, and the dropping of the demand was correct.
Issue (ii): whether the demand was otherwise barred by limitation.
Analysis: The records were maintained by the assessee and were available for departmental verification from time to time. The department did not show any circumstance justifying the extended period, and the finding that the demand was time-barred was supported by the record.
Conclusion: The demand was barred by limitation.
Final Conclusion: The impugned order was free from infirmity, and the Revenue's challenge failed in full.
Ratio Decidendi: A demand based on allegedly non-compliant records cannot be sustained where the department withholds the relied upon documents, since such nondisclosure offends natural justice; a demand may also fail on limitation where the assessee's records were available for regular departmental scrutiny.
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