Clandestine removal demands based on electricity use need contrary technical evidence before interim recovery can be sustained.

A clandestine removal demand based mainly on electricity consumption and alleged excessive process loss did not justify coercive recovery at the interim stage where the assessee produced contrary technical reports from two Chartered Engineers. The technical evidence supported the reasonableness of electricity use for the furnace type in issue, while the Revenue failed to rebut that material with independent expert opinion or other supporting technical evidence. Explanations concerning furnace type, power interruptions, process wastage and cost of production were therefore not shown to be inadequate. On that basis, a prima facie case was established for waiver of pre-deposit and stay against recovery of duty, interest and penalty.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and grant of stay against recovery of duty, interest and penalty in a clandestine removal demand based principally on electricity consumption and alleged excessive process loss.

Analysis: The demand rested substantially on electricity consumption per metric tonne and a technical report relied upon by the Revenue. The appellants produced contrary reports of two Chartered Engineers supporting the reasonableness of the electricity consumption in the context of the furnace type used, and the Revenue did not effectively meet that evidence. The basis for rejecting the appellants' explanation regarding furnace type, power interruptions, process wastage, and cost of production was found to be inadequate, particularly as no independent expert opinion or supporting technical material was brought by the Revenue to discredit those explanations. The order also noted that the case was materially similar to other decisions where relief had been granted, and that mere electricity consumption data, without more, was insufficient to fix normal production conclusively.

Conclusion: The appellants were held to have established a prima facie case for stay and waiver of pre-deposit.

Ratio Decidendi: Where a demand of clandestine removal is founded mainly on electricity-consumption-based estimates, contrary technical material produced by the assessee cannot be ignored, and without independent expert support the Revenue cannot conclusively fix normal production or sustain coercive recovery at the interim stage.

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