The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand on clearance of hydraulic excavators on the grounds of absence of evidence regarding the removal of goods.
L & T Construction Equipment Ltd, the appellant assessee had cleared hydraulic excavators to contractors/construction companies claiming exemption under exemption Notification No.108/95 Central Excise.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of Central Excise duty of Rs.11,97,61,791/- with Education Cess and Secondary Education.
Prakash Shah, the counsel for the assessee contended that there was no evidence to allege that the goods were diverted or being diverted and in the absence of any evidence to the core condition of the notification, demand was unsustainable.
Also submitted that without giving any specific finding on said issue, the adjudication authority confirmed the demand for one year.
K A Jathin, the counsel for the department contended that the demand will sustain for one year and only for quantification of the demand of duty for one year, it was remanded and evidence related to premature removal of goods can be considered in de-novo adjudication.
The Bench observed that there was no finding given by the Adjudication Authority and the demand was confirmed on the presumption that the machinery may be removed after the completion of the project.
A single-member bench comprising P A Augustian (Judicial) held that due to the absence of any evidence regarding the removal of the goods before the completion of the project, the benefit of the notification could not be denied and the demand against the assessee was unsustainable.
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