Failure to Consider Superintendent’s Certification and Defence Evidence: CESTAT Remands Matter in Exemption Case [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal by remanding the matter for a fresh decision, after finding that the Commissioner had denied the benefit of Notification No. 50/2003-CE on assumptions while ignoring crucial departmental evidence confirming commencement of commercial production.

The appellant, Gilco Steel Limited engaged, in the manufacture of black and galvanized pipes/tubes and electrical poles, was availing the area-based exemption.

The revenue alleged that the unit had not commenced commercial production on or before 31.03.2010, had procured raw materials only after the appointed date, had purchased certain machinery after the cut-off, and had manipulated documents to claim exemption.

A Show Cause Notice (SCN) dated 05.05.2011 demanded central excise duty of ₹1,15,72,674 with cess, interest, and penalties, which the Commissioner confirmed on 13.09.2011.

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Before the Tribunal, the appellant argued that the Department’s case was based merely on suspicion drawn from the officers’ visit on 06.04.2010, when the plant was under breakdown and repair. They relied on the Superintendent of Central Excise’s certificate dated 29.07.2010 clearly stating that the unit was working and availing the exemption.

The appellant contended that the key certificate, which was issued after the officers' visit, was ignored without any findings. They further submitted that allegations of fabrication, mistakes in khasra numbers, and assumptions regarding machinery installation were made without investigation, and even their alternative plea on available CENVAT credit was not considered.

The Bench Comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) noted that the Commissioner selectively relied on the visit report of 06.04.2010 while completely overlooking the Superintendent’s later certification that the unit was operational as on 31.03.2010.

The Tribunal found that no enquiry was conducted into transportation, manufacture, or financial transactions to support allegations of manipulation. It also observed that submissions regarding purchase of raw materials for expansion and clerical errors in khasra numbers were not addressed. A Khasra number is a unique identifier of each plot of land in rural areas, similar to a survey or a plot number in urban areas.

The Tribunal held that crucial evidence was ignored, essential issues remained unexamined, and concluded that the denial of exemption could not stand.

Accordingly, the matter was remanded for fresh consideration after verifying the evidence and granting proper opportunity to the appellant.

The assessee was represented by Mukul Singla, while Anurag Kumar along with Narinder Singh appeared for the Revenue.

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