CESTAT Chennai Rules Production Norms Can’t Justify Excise Demand Without Proof

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.07.2025

CESTAT Chennai Rules Production Norms Can’t Justify Excise Demand Without Proof

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai has delivered a major relief to M/s Adsorbent Carbons Pvt. Ltd., Tuticorin, by dismissing the Revenue’s appeal and allowing the assessee’s cross appeals. The Tribunal found no basis for the allegations of clandestine removal of Granulated Activated Carbon (GAC) and held that duty demands based on unverified production norms were unsustainable.

Case Background

• The appellant manufactures Granulated Activated Carbon from coconut shells.
• The case arose from a series of show cause notices (SCNs) alleging that the assessee failed to maintain proper production records, particularly absorption capacity data, as required under Rule 10 of the Central Excise Rules, 2002.
• The department alleged clandestine removal, based on assumptions from norms laid down by the Coconut Development Board.
• Original demands of over ₹32 lakh in Central Excise Duty along with interest and penalty were confirmed in 2016.
• Later, fresh demands were raised for subsequent periods.

This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

Source: CESTAT Chennai

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