Central Excise Duty Demand Fails Where Documents Are Not Examined and Manufacture Is Not Proved

Central excise duty demand was held unsustainable because the adjudicating authority did not independently examine the invoices and other documentary material despite a specific remand direction. The order instead relied on assumptions about trade practice and repeated the show cause allegations without a fresh factual finding. As the Revenue did not discharge the burden of proving manufacture, the confirmation of demand could not stand. The impugned order was set aside and the appeals were allowed.

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Issues: Whether the confirmed demand of central excise duty could be sustained when the authority did not examine the invoices and other documents despite a specific remand direction and the Revenue failed to prove manufacture.

Analysis: The matter had been remanded earlier with a clear direction to decide the dispute afresh after considering the documents. The impugned order, however, did not undertake any real examination of the invoices or other documentary material, even on a sample basis. Instead, it proceeded on assumptions about prevailing trade practice and repeated the allegations in the show cause notice without recording an independent finding on the documents. Since the Revenue bore the burden of proving that manufacture had taken place, and that burden was not discharged despite repeated opportunities, the confirmation of demand could not stand.

Conclusion: The demand of central excise duty was unsustainable and the finding was in favour of the appellant.

Final Conclusion: The impugned order was set aside and the appeals were allowed.

Ratio Decidendi: A duty demand cannot be sustained on presumptions or generalized trade practice when the adjudicating authority fails to independently examine the relevant documents and the Revenue does not discharge the burden of proving manufacture.

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