Excise duty demand cannot survive where amortised tool cost and duty payment records were on record and ignored.

Duty demand was held unsustainable where the assessee had disclosed the advance received, shown that tool cost was amortised in the assessable value, and produced records indicating excise duty payment on the relevant value. The Tribunal noted that reply to the show cause notice, later correspondence, PLA entries and related documents were on record, and held that the appellate authority should have examined them before sustaining the adjudication. Because the impugned order did not properly deal with these materials and was non-speaking and unreasoned, it was set aside in favour of the assessee.

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Issues: Whether the demand could be sustained when the assessee had disclosed the advance received, accounted for the amortised cost of tools, and produced records showing that excise duty had been paid on the relevant value.

Analysis: The records showed that the assessee had informed the Department through its reply to the show cause notice and later correspondence that the tools were manufactured for use in goods supplied to L&T and that the cost of the tools was being amortised in the assessable value. The Tribunal also noticed PLA entries and other documents indicating that duty had been paid on the amortised cost. Since these materials were on record, the appellate authority ought to have examined them before confirming the adjudication. The impugned order was found to be non-speaking and unreasoned, and the factual basis for denying the assessee's claim was not adequately tested.

Conclusion: The demand was not sustainable and the impugned order was set aside in favour of the assessee.

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