TaxTMI 
TaxTMI 
1998 (1) TMI 340
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....,056.26 was confirmed; (iv) the noticees are liable to penal action; a penalty of Rs. 5.00 Lakh was imposed on M/s. Nagpal Steels Limited, a penalty of Rs. 1.00 Lakh was imposed on Shri Chuni Lal Nagpal, Managing Director, a penalty of Rs. 50,000/- was imposed on Shri R.P. Nagpal, Director of Nagpal Steels Limited and a penalty of Rs. 10,000/- was imposed on Shri Wirsa Singh, Driver of M/s. Nagpal Steels Limited. Being aggrieved by this order, the Appellants have filed the present appeals. 2. The facts of the case, briefly stated, are that information was received that the appellants were indulging in suppression of production and in clandestine removal of the Steel ingots; a surveillance was kept on the activities of the Appellants. Truck No. PUR 7537 was intercepted at about 1500 hrs. on 11-10-1990 while coming out of their premises. On demand, the Driver of the Truck, Shri Wirsa Singh produced one Central Excise Gate Pass No. 515 dated. 11-10-1990 showing the time of removal as 0850 hrs. On being questioned, Shri Wirsa Singh, Driver admitted that he had already transported one consignment of ingots on the same Gate Pass and that the ingots loaded in the truck were being tr....
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.... ingots was recorded. 9. Shri Chuni Lal Nagpal, Managing Director of the Appellant Company in his statement recorded on 11-10-1990 admitted that he had prepared the Gate Pass No. 515, dated 11-10-1990 showing the time of removal as 0850 hrs and the quantity of ingots cleared as 14.220 MT which the truck driver had produced before the Central Excise Officers as covering documents of the seized steel ingots; that non-issue of another gate pass without payment of duty was due to the mistake committed by their employee. He also admitted that shortage of Steel ingots weighing 14.230 MT detected by the Officers in the course of physical verification can be ascribed to the second clearance on the same gate pass. He also admitted that the resumed records were prepared by their employees. He offered to pay the duty on the unaccounted production and clearance after checking records. But when confronted with the statement of S/Shri Wirsa Singh, Jeet Singh, Kaushal Kumar, R.C. Tiwari, Om Pal, Brij Mohan and Sucha Singh, he admitted them to be correct. 10. In follow up action, records of Octroi Post, Khanna side, Mandi Gobindgarh were examined. It was noticed that Octroi receipt No.....
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.... electricity ranged between 750 KWH to 800 KWH (Units). Enquiries caused with M/s. Hindustan Brown Boveri Limited, the supplier of Furnaces to the Appellants, indicated that power consumption to super heat and melt down in respect of Arc furnace and induction furnace was 485 KWH and 540 KWH respectively. Since electricity was one of the main raw materials, for manufacture of steel ingots, 851 KWH (Units) of electricity per MT of Steel Ingots was taken as the norm for ascertaining the production of ingots. On comparison of the production figure of steel ingots recorded in the two heat registers maintained by melters with the production recorded in the Central Excise records, it was found that during the period January, 1990 to 10-10-1990, the appellants had suppressed production of 4062.797 MT of Steel ingots. These registers were, however, subsequently found missing from the records. 14. On examining the entries in the 13 rough pads and comparing them with the Central Excise gate passes. Form IV Register and outgoing and incoming registers for the relevant period, it was found that out of 417 weighments recorded therein, 111 weighments pertaining to steel ingots with a total ....
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.... norms of production arrived at have been applied to the past period. No attempt was made to co-relate the figures of production with the raw material account or the private records or the octroi receipts. 13. The adjudicating authority has, however, not discussed as how the figures of clandestine removals are relatable to these private records. The evidence regarding clandestine removals has not been discussed independently. 14. A number of contentions raised by the applicants such as quality of the scrap, failure of the Truck etc. do not inspire any confidence. At the same time, the material placed on record by them needed to be discussed and analysed. In the circumstances, we are inclined to remand the matter for de novo adjudication. 17. In the case Premier Rubber Products v. Collector of Central Excise - 1992 (20) E.T.R. 143, the Tribunal had suggested that in cases of unexplained large variations into consumption of electricity and corresponding production of excisable goods, a test run production could have been done in the assessee's unit for a set period and a norm adopted on that basis. 18. Accordingly, we set aside the impugned order and direct th....
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....eliable. 73/125 23. The ld. Counsel also argued that Shri Wirsa Singh, the Driver had retracted his earlier statement under his letter dated 15-10-1990; that he was not produced for cross-examination; that his statement cannot be presumed to be true in view of Section 9D(2) of the Central Excise Act, 1944; that Shri Jeet Singh was not produced for cross-examination, therefore, his statement cannot be treated to be true; that Shri Chuni Lal Nagpal, Managing Director had also retracted his statement on 15-10-1990 and had given detailed reasons for retraction; that the physical verification of steel ingots lying in the factory premises was an approximate estimate; that the carbon copy of the octroi receipt contained mutilated entries and was not legible and not reliable; that the Panch witnesses were cross-examined, but did not support the case of the Department; that the truck had been loaded with 162 pieces (155 Ingots and some ingots cut into pieces) in the morning of 11-10-1990; that the gate pass No. 515 covering the goods in the truck was issued; that a defect developed in the gear box of the truck and the truck had to be placed under repairs. In support of this contentio....
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....r private records or the octroi receipts; that the Department has not brought any evidence on record to show that as to what extent there was clandestine removal of ingots; that the test run was directed by the Tribunal which should have been done in the Assessee's unit was not done; that there has been no co-relation between the raw materials and the finished final products; that octroi receipts are not reliable documents; that no evidence has been brought on record that there was surreptitious removal; that some estimates were made on the basis of heat registers which were not produced for inspection as they are reported to be lost; that since the Registers are not available for inspection, it was submitted by the ld. Counsel that no reliance can be placed on these registers; that the finding of the ld. Commissioner that the test run may not be representative was only a sunrise and presumption. 26. On the question of seizure of the goods from the truck, the ld. Counsel submitted that Panchnama was prepared at 1600 hours, there were two witnesses, Shri Makhan Singh and Shri Suraj Prakash; that the truck went out of order and was under repairs; that confessional statement giv....
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....mpany admitted that he prepared the gate pass in the morning and that for the present consignment, he could not prepare a Gate Pass and it was the mistake of his employees. The ld. DR, therefore, submitted that the goods loaded in the truck were being removed without payment of duty and, therefore, the ld. Commissioner has rightly confiscated the same and released them after appropriation of the amount of security in lieu of confiscation. The ld. DR further stated that on the same ground confiscation of the truck and the imposition of personal penalty on the persons concerned is justified. 30. On the question of estimating production by taking the consumption of electricity, the ld. DR submitted that for manufacture of ingots, 2 inputs are main inputs; that these inputs are Iron & Steel scrap and Electricity. He submitted that whereas scrap can be bought from a number of sources and is of different quality and variety, the constant figure is electricity. He submitted that electricity is received from one source and is accounted for in the bills periodically issued and paid. He submitted that in the instant case, the estimations were done on the basis of electricity consumptio....
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....entral Excise Records. Thus a pattern emerged indicating that on an average 300 MT of Steel ingots were being manufactured and cleared surreptitiously without payment of duty. The ld. DR submitted that Shri Joga Singh, in his statement, confirmed that ingots were being supplied without payment of duty. Shri Joga Singh was one of the customers of the Appellant company. This statement of Shri Joga Singh was further confirmed by Shri Vinay Kumar. The Octroi records of the Octroi Post, Mandi Gobindgarh were also checked which also supported the fact that steel ingots were being removed without payment of duty. 32. The ld. DR further submitted that during the period March, 1988 to 10-10-1990, 47692069 KWH units of electricity were consumed and by taking 851 units necessary for manufacture of one MT of Steel ingots, the production of the Appellants during that period comes to 56047.384 MT, but in the official records, only 45,423.600 MT of Steel ingots were recorded. Thus there was a suppression of 10,618.784 MT of Steel ingots. Records of Octroi post, Ludhiana were also examined and it was noticed that during the period 24-1-1989 to 10-10-1990, 237 consignments of steel scrap weig....
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....of representative character because the appellants could have made the heat to take extra time and to use only that quality of scrap which would result in more consumption of electricity, thus defeating the very purpose of test run of production. Moreover, a better indicator in the form of monthly production report was available and further this report was supported by the expert opinion. 35. The ld. DR, therefore, submitted that the lower authorities have rightly confiscated the goods and demanded duty and imposed personal penalty. 36. Heard submissions of both sides. On careful consideration of the facts of the case and submissions made, we note that there are three distinct issues to be adjudged in this case. The first issue is confiscation of Steel ingots weighing 14.030 MT valued at Rs. 1,14,695.00 and Truck No. PUR 7537 valued at Rs. 1,50,000. We note that the truck was intercepted carrying 14.030 MT of steel ingots. The driver of the truck on demand produced a Gate Pass No. 515 dated 11-10-1990. When questioned, the driver admitted that he had already transported one consignment of ingots on the same gate pass and that the ingots loaded in the truck were being tr....
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....ctricity according to the standard fixed by the manufacturers. In this case, we note that M/s. Hindustan Brown Boveri Ltd. were the manufacturers and suppliers of the furnaces (Induction Furnace and Arc Furnace). The consumption of electricity indicated by them for manufacture of one M.T. of Steel Ingots was much less than what the Collector accepted. Therefore, the second factor will be as to what precisely the consumption of electricity was in respect of the Appellant. No doubt, trial runs were conducted in other factories which indicated the consumption of electricity upto 1100 KWH units for manufacture of one MT of Steel ingots. However, these trial runs were limited for a short period and did not cover a sufficiently long period. Moreover, when the trial run is conducted, various factors are necessary to be considered and once the management of the factory knows that a trial run is in progress, they try to maximise the consumption of electricity. As against this, we note that the Department had relied upon the production/monthly report for the month of January, 1990. This report covered a period of 31 days. During these 31 days, the exact consumption of electricity was noted a....