2024 (10) TMI 4 - AT - Central Excise

CESTAT allows appeal against duty demands on menthol manufacturers under Notification 56/2002-CE, sets aside penalties

CESTAT Chandigarh allowed the appeal concerning duty demands raised under Notification No. 56/2002-C.E. against units manufacturing menthol and ... Process amounting to manufacture or not - process carried out by the appellant on the raw materials - manufacture of menthol and De-mentholised Oil (DMO) during the relevant period - SCN to several units of J&K including the appellant raising demands of duty refunded to or self-credit taken by such units under Notification No. 56/2002-C.E. dated 14.11.2002 - HELD THAT:- This issue is no more res integra and the Tribunal has already decided a number of cases arising out of the same investigation and all the appeals have been allowed by the Tribunal in favour of the assessees. In this regard, it is pertinent to refer to the decision of this Tribunal in the case of Sangam Aromatics & others [2019 (5) TMI 1339 - CESTAT CHANDIGARH] wherein this Tribunal has decided a bunch of appeals vide Final Order No. 60498-60506/2019 dated 03.04.2019 holding that 'the Jammu based manufacturer were manufacturer during the impugned period and paid the duty on the goods manufactured by them. Consequently, the cenvat credit can’t be denied to the recipient of goods located in the State of U.P i.e. M/s Sangam Aromatics. We also held that the allegations against the appellants are based on assumption & presumption which is not sustainable. In view of above, no penalty is imposable on the appellants.' The impugned order is not sustainable in law and is liable to be set aside - Appeal allowed. Issues Involved:1. Whether the appellant was engaged in the manufacture of menthol and De-mentholised Oil (DMO) during the relevant period.2. Whether the demand raised by the Commissioner of Central Excise, Chandigarh-II, is sustainable.3. Whether the demand is time-barred.4. Whether the appellant is entitled to the benefit of Notification No. 56/2002-C.E. dated 14.11.2002.5. Whether the findings in the impugned order are based on assumptions and presumptions.Issue-wise Detailed Analysis:1. Whether the appellant was engaged in the manufacture of menthol and De-mentholised Oil (DMO) during the relevant period:The appellant argued that their unit had been manufacturing menthol and DMO since 23.06.2005, supported by the jurisdictional Range Officer's report confirming the installation of new plant and machinery, and the clearance of goods valued at Rs. 37,51,450/- on payment of duty and education cess of Rs. 6,12,237/-. Additionally, the Central Excise officers and the District Industry Centre of Jammu regularly verified the appellant's production and inter-state transactions. The Tribunal noted that similar cases arising from the same investigation had been decided in favor of the assessees, confirming that the Jammu-based manufacturers were indeed engaged in manufacturing activities.2. Whether the demand raised by the Commissioner of Central Excise, Chandigarh-II, is sustainable:The Tribunal found that the demand raised was based on investigations conducted by the Commissioner of Central Excise, Meerut-II, which alleged that the appellant did not purchase crude mentha oil and thus did not manufacture any goods. However, the Tribunal observed that the investigations did not include the appellant's end and were based on assumptions. The Tribunal highlighted previous decisions where similar demands were set aside due to lack of concrete evidence against the manufacturers. The Tribunal concluded that the demand raised was not sustainable as it was based on assumptions and lacked corroborative evidence.3. Whether the demand is time-barred:The appellant contended that the demand was time-barred as the investigation began on 01.05.2006, but the show cause notice was issued on 20.12.2012, more than five years later. The Tribunal did not explicitly address this issue in the judgment, but the setting aside of the demand implicitly supports the appellant's contention of the demand being time-barred.4. Whether the appellant is entitled to the benefit of Notification No. 56/2002-C.E. dated 14.11.2002:The appellant argued that they had taken self-credit of duty paid from PLA, which was later sanctioned by the jurisdictional Assistant Commissioner of C.E. under Notification No. 56/2002-C.E. The Tribunal noted that the appellant had been regularly filing ER-1 returns and that similar cases had been decided in favor of the assessees, confirming their entitlement to the benefits under the said notification. The Tribunal concluded that the appellant was entitled to the benefit of Notification No. 56/2002-C.E.5. Whether the findings in the impugned order are based on assumptions and presumptions:The appellant argued that the findings in the impugned order were based on assumptions and presumptions, without any investigation at the appellant's end. The Tribunal agreed, noting that the investigations were conducted by the Commissioner of Central Excise, Meerut-II, and were generalized without concrete evidence against the appellant. The Tribunal highlighted previous decisions where similar findings were set aside due to lack of concrete evidence. The Tribunal concluded that the findings in the impugned order were indeed based on assumptions and presumptions and were not sustainable.Conclusion:The Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any, as per law. The Tribunal held that the appellant was engaged in manufacturing activities, the demand raised was not sustainable, the appellant was entitled to the benefit of Notification No. 56/2002-C.E., and the findings in the impugned order were based on assumptions and presumptions.