Exemption and refund under Notification 56/2002-CE sustained where lack of corroborative evidence made the demand unsustainable.

Entitlement to exemption and cash refund under Notification No. 56/2002-CE was sustained because the revenue lacked concrete evidence that the units were non-manufacturing or that inputs were not received. The allegation that farmers and commission agents were fictitious was not supported by corroborative material; transportation entries, departmental visits, local authority verification, and other records indicated receipt of inputs and continued manufacture. As the demand rested mainly on an investigation from another jurisdiction and on assumption rather than direct adverse evidence, the proceedings were treated as unsustainable and the refund benefit was allowed.

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Issues: (i) Whether the appellants were entitled to exemption and refund under Notification No. 56/2002-CE dated 14.11.2002 in the absence of concrete evidence that the units were non-manufacturing or that inputs were not received.

Analysis: The sole allegation was that the farmers and commission agents were non-existent and, therefore, the appellants had not received inputs or manufactured goods. The record, however, showed transportation entries, departmental visits, verification by local authorities, and other material indicating receipt of inputs and continued manufacturing activity. The impugned demand rested mainly on the investigation at Meerut and not on any direct adverse evidence from the appellants' jurisdiction. In the absence of corroborative evidence disproving manufacture or receipt of inputs, the allegation was treated as one based on assumption and presumption.

Conclusion: The appellants were held entitled to the benefit of Notification No. 56/2002-CE dated 14.11.2002 and to refund of duty paid in cash, and the proceedings were held unsustainable.

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