Excess electricity and corroborative records can justify pre-deposit in clandestine removal disputes, but weak input estimates may not.

In clandestine removal matters, excess electricity consumption, when supported by corroborative records such as bills, forms, private records, supplier correspondence, balance-sheet data and admissions, was treated as sufficient to make out a prima facie case for demanding pre-deposit and declining stay. The absence of proof of unaccounted raw material, transport or buyer records did not, by itself, displace that inference. By contrast, where the demand against Shree Steel Castings Pvt. Ltd. rested on a melter's estimate of silico-manganese consumption per tonne of ingots, the foundation was considered weak and unreliable, so a prima facie case for waiver of pre-deposit was found.

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Issues: (i) whether, in a batch of stay applications concerning alleged clandestine manufacture and removal of M.S. ingots, excess electricity consumption supported by surrounding circumstances furnished a prima facie case for demanding pre-deposit and refusing stay; and (ii) whether the case of Shree Steel Castings Pvt. Ltd., where the demand was based on consumption of silico-manganese alloy, disclosed a prima facie case for waiver of pre-deposit.

Issue (i): whether, in a batch of stay applications concerning alleged clandestine manufacture and removal of M.S. ingots, excess electricity consumption supported by surrounding circumstances furnished a prima facie case for demanding pre-deposit and refusing stay.

Analysis: The allegations were not founded on electricity consumption alone in the abstract. The records referred to electricity bills, G-7 forms, private records, correspondence with furnace suppliers, balance-sheet data, admissions in some cases, and other corroborative circumstances showing suppressed production. The burden initially lay on the Revenue to show a credible basis for clandestine removal, and that burden was treated as discharged by evidence of excess consumption of electricity and related supporting material. The absence of proof of unaccounted raw material, transport, or buyer records did not, by itself, negate the prima facie inference where clandestine activity was alleged. The earlier decision relied upon by the assessees was distinguished because it proceeded only on a technical opinion without corroboration, whereas the present matters contained additional evidence.

Conclusion: A prima facie case was made out against the assessees in these matters, and pre-deposit was warranted in the prescribed proportions.

Issue (ii): whether the case of Shree Steel Castings Pvt. Ltd., where the demand was based on consumption of silico-manganese alloy, disclosed a prima facie case for waiver of pre-deposit.

Analysis: The demand against this assessee rested on a melter's statement regarding the quantity of silico-manganese allegedly used per tonne of ingots. That basis was questioned as being inconsistent with technical standards and was also supported by a later appellate order that had not been shown to be stayed. The Tribunal treated the foundation of this demand as comparatively weak and accepted that a demand built on the alleged consumption of a minor input, without a reliable and persuasive basis, did not stand on the same footing as the electricity-based cases.

Conclusion: Shree Steel Castings Pvt. Ltd. made out a prima facie case for waiver of pre-deposit, and its stay application was allowed.

Final Conclusion: The batch was disposed of by directing pre-deposit against all assessees except Shree Steel Castings Pvt. Ltd., while granting stay in respect of the latter on the strength of its prima facie case. Compliance with the ordered deposits would secure waiver and stay for the balance amounts.

Ratio Decidendi: In clandestine removal cases, excess consumption of electricity or other input, when supported by corroborative circumstances, can justify a prima facie demand and pre-deposit; but where the demand is founded on an unreliable estimate based on a minor input, waiver may be granted.

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