Refund rejection based only on ER-2 returns set aside; production records required fresh verification before deciding the claim.

Refund rejection based solely on ER-2 returns was held unsustainable where the claimant disputed the return entries and relied on production ledgers and shipping documents to show actual manufacture and export. Because the factum of production required fresh verification, the matter was remanded to the original authority for reconsideration after examining the documents produced and observing natural justice. The impugned order was set aside.

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Issues: Whether the rejection of refund on the basis of the ER-2 returns alone was sustainable, and whether the matter required remand for fresh verification of production records.

Analysis: The refund claim had been rejected mainly on the premise that the ER-2 returns showed no manufacture during the relevant period. The appellant asserted that the entries in the returns were incorrect and that actual production and export were supported by other records such as production ledgers and shipping documents. In view of the dispute regarding the factum of production, the records needed fresh examination by the original authority after considering documents produced by the appellant and after observing the principles of natural justice.

Conclusion: The impugned order was set aside and the matter was remanded to the original authority for fresh decision after verification of the relevant documents.

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