High Court set aside demand as there had been no serious investigation

1. The Appellant was engaged in the manufacturing of air-conditioners, and trading of compressors, water coolers, transformers etc.
2. It was exempted from payment of excise duty.
3. In a search operation, Acs & compressors were siezed from its factory and its proprietor’s residence.
4. CCE passed adjudication order that Appellant was not eligible for exemption under Notification No. 75/87 CE as the aggregated value of clearances of all excisable goods from had exceeded the laid down eligibility limit.
5. CEE concluded that the Appellant had contravened Rules 9(1), 52A, 53, 173B, 173F, 173G and 226 and did not record the correct production of ACs in the excise records and cleared the same without payment of excise duty leviable thereon.
6. The Appellant was held liable to pay Rs.77,95,808 for contravening the statutory provisions as well as for penalty.
7. CESTAT decided the clandestine removal of 606 ACs with a corresponding duty demand of Rs.58,44,825 and the clandestine removal of 24 ACs with a corresponding duty demand of Rs.3,16,800, against the appellant.

On appeal, the High Court held as under:

8. The Court also finds that no attempt has been made to undertake any serious investigation even as regards the details furnished by the Appellant or those gathered in the course of investigation.

9. The Court is satisfied that the impugned majority order of the CESTAT on the issue of clandestine removal of 606 ACs by the Appellant without payment of duty suffers from serious errors and, therefore, cannot be sustained in law.

10. The Court set asides the impugned majority order of the CESTAT on the issue concerning the alleged clandestine removal of the 606 ACs by the Appellant and hereby quashes the corresponding demand of Rs.58,44,825.

Case Reference - Flevel International vs Commissioner Of Central Excise.

Delhi High Court