TaxTMI 
TaxTMI 
1994 (8) TMI 130
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....t for the manufacture of steel ingots of special specifications and a large quantity of steel ingots produced in the appellant's unit are used for captive consumption in the manufacture of forged products. On 24-7-1987, the Central Excise Officers of Anti-Evasion Wing of the Central Excise Collectorate, New Delhi searched the factory premises of the appellant on the basis of prior intelligence that the appellants were evading central excise duty on a large scale by non-accountal of the major part of their production of ingots in the statutory records. During the course of search several documents such as scrap book and scrap memo, log sheets, bill books, chemical analysis report register, production and despatch books and internal gate passes were recovered. The statement of Shri R.K. Shrivastava, General Manager (Technical) was also recorded and he stated that he had joined the company only one month prior to the search and, therefore, had no knowledge of the seized records. On the basis of these documents, the charges were framed against the appellants for clandestine manufacture and removal of 5222.265 MTs. of MS ingots during the period above mentioned and a show cause notice d....
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.... to be returned to the dealer is not entered in the scrap memo. Further, it is not possible to manufacture 5222.265 MTs of MS ingots out of 489.665 MTs of scrap alleged to have been purchased by the appellants. Finding : The plea of appellants that the scrap received as per entries in Saraswati scrap book was subject to verification and testing, and if found unfit, was to be returned to the scrap supplier is not convincing in the absence of any evidence by way of entry in any register or any correspondence showing movement of scrap to a place outside the factory. The scrap whether acceptable or not is required to be accounted for and shown returned from the raw material account register. Similarly, scrap arising out of the process of manufacturing like defective ingots are also required to be accounted for properly. The appellants have also not offered any explanation for non-accountal of defective ingots in the raw materials register as melting scrap. The other documents like chemical analysis report which provides for chemical analysis of date-wise and heat-wise testing of steel ingots also do not indicate any rejections. (ii) Log Sheets Case of the Department :&ems....
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....raw materials from the scrap yard to the steel melting shop and the total No. of heats mentioned in the log sheets during a particular period tally with the number of heats for which charges have been paid to the contractor. Defence : There is nothing incriminating in this document. Finding : 131 heats during March 1986 are admitted by the appellants. The quantity produced as per the log sheets is approximately 698 MTs (700 MTs as per personal note book). The appellants have accounted for 564.890 MTs of steel ingots during this period in their RG-I register; but have not explained the difference of production of 135.110 MTs as noticed from the entries recorded in the sheets and personal note book and RG-I register. (iv) Chemical Analysis Report Register Case of the Department : The number of ingots produced as per log sheets maintained tally with similar particulars contained in the chemical analysis report register. Defence : The weight indicated in this register is not authentic as already explained while defending the allegation of maintenance of log sheets. Regarding tallying of the entries in the log sheets and this register, it is stated that the....
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....e of consignor/consignee. Scrutiny of the entries pertaining to the clearance of ingots shows that very few entries have been accounted for in the RG-I register. Defence : As the actual quantity of ingots consumed captively for forgings has not been made known to the appellants, the entries in this document has not been explained by them. Finding : The entries in the weigh-bridge register are found reflected in the other documents like private note books and log sheets and therefore, is a reliable document. (vii) Despatch Slips and Daily Despatch Report Case of the Department : Despatch slips issued to official at the factory gate to allow clearance contains date, vehicle No., name of consignee, size and weight of the ingots and tally with the quantity despatched in the production and despatch books. But only some of the despatches are entered in the RG-I register. The despatch reports are statements of production of ingots and figures therein varied from the RG-I figures. Defence : Despatch slips were prepared on the basis of the orders received from the various customers but did not represent the actual despatch of the material because the materials not accepted by....