TaxTMI 
TaxTMI 
2009 (3) TMI 688
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....rs. apart from 06:00 Hrs. to 17:00 Hrs. (i.e. the shift when the manufacturing operation was actually carried out). 4. It has further been alleged in the impugned Notice that even though substantial power was consumed during the time period from 17:00 Hrs. to 23:00 Hrs. and 23:00 Hrs. to 06:00 Hrs., no production was shown either in Furnace Log Sheet (i.e. Hearwise Log Sheet showing production with details of raw materials used - FLS hereafter) or in RG-I resulting in suppression of huge production with the intent to evade payment of duty with detailed calculation as reflected in tables of the impugned Notice. 5. The Appellant states that consumption of electricity as reflected in Electricity Bills have no connection with the production of finished goods actually manufactured by the Appellant during the period when manufacturing activities were actually carried out i.e. from 06:00 Hrs. to 17:00 Hrs. "The various factors which actually result into consumption of more electricity are as under : (i) The factory of the Appellant being located in a distant and backward rural area, the labour engaged in the factory for production of goods are n....
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....cooling down of the furnace the damage is minimized by slow heating of the furnace which work is carried out in shifts other than production shift resulting in considerable quantity of power consumption. (x) The Appellant disputed the Electric Consumption Bills raised by the State Electricity Board by letters dated 15-6-1999, 7-8-1999, 13-9-1999, 19-1-2001, 22-3-2001 and 14-4-2001 with specific declaration that production operation during the relevant months were suspended. Nothing to the contrary was heard from the State Electricity Board. (xi) The Appellant also contacted one Das Electric of Kolkata for study of electric consumption as indicated in the Electric Consumption Bills during the period from 1998-2001 which was thoroughly examined and expert opinion was furnished by the said Das Electric by their letter dated 2-6-2005." 6. The Notice was decided ex-parte by the Additional Commissioner of Central Excise, Siliguri Commissionerate (the Addl. Commissioner hereafter) vide Order-in-Original No. 11/Addl.Commr/CE/SLG/2004, dated 31-1-2005 by confirming the demand for Rs. 28,43,983.00 as raised by the impugned Notice along with i....
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....ore the Commissioner (Appeal-IV) of Central Excise, Kolkata against the aforesaid Order-in-Original No. 24/Addl.Comm/CE/SLG/05 dated 17-11-2005 which was decided by the Commissioner (Appeals) vide Order-in-Appeal No. 10/SLG/2006 dated 28-4-2006 by remanding once again the matter to the Addl. Commissioner for fresh decision "after allowing the opportunity of hearing to the Appellant." 10. The Notice was decided afresh by the Addl. Commissioner vide Order-in-Original No. 03/Addl.Comm/CE/SLG/07, dated 28-3-2008 (the order hereafter) by confirming once again the demand for duty of Rs. 28,43,983.00 raised by the impugned Notice along with interest chargeable thereon and imposing upon the Appellant a penalty of identical amount of Rs. 28,43,983.00 inter alia holding and/or observing : (a) "I find that the calculation for the alleged evasion of duty by way of suppressing production was based on the furnace Log Sheets according to which the average production per hour come to 0.600 MT (Approx.), the Generator input taken as 1300 KVA as taken by the authorized representative .... in his statement 13-2-03, the power factor and KWH taken from bills. I also find ....
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....settled by the Hon'ble Supreme Court and the Hon'ble Tribunal by series of decisions from time to time as also from in application and/or misapplication of judicious mind, biased, arbitrary, wrongful, erroneous and bad in law. For that the Addl. Commissioner absolutely failed in his appreciation of facts on record in passing the impugned order inter alia holding and/or observing "The said assessee have also nowhere brought on record either before the jurisdictional Central Excise Authorities nor before the Adjudicating Authority that there was a dispute in the electricity bill received by them. No evidence of such dispute with the State Electricity Board and the so called opinion were produced during the entire period of the enquiry conducted by the departmental officers. The credibility of such a contention made after so many years is doubtful and therefore unreliable" inasmuch as copies of all letters addressed to the State Electricity Board from time to time disputing the bills raised during the period as also expert opinion obtained from M/s. Das Electric were filed before the Additional Commissioner during the course of hearing of the Notice on being remanded by the Commissio....
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....d by the Addl. Commissioner was passed devoid of any tangible and corroborative evidence and based only upon assumptions and presumptions is clearly evident from the observation of the Addl. Commissioner in passing the impugned order inter alia holding and/or observing "The Furnace Log Sheet is an important document kept by technical operator of factory and can not be ignored. Single parameter of production have not been taken at all main parameters viz. Generator input, power factor and KWH had been taken for consideration which are equal important and form tangible evidences. This has been corroborated by the consumption of raw materials used as depicted in Furnace Log Sheets and installed capacity of machinery existing at the relevant period in factory .... and the Furnace Log Sheet maintained by the factory" inasmuch as it is an undisputed fact that the Furnace Log Sheets so much relied upon in passing the impugned order pertain only to working shift of the factory (i.e. 05:00 Hrs. to 17:00 Hrs.) and quantum of raw material relatable to such Furnace Log Sheets represent raw materials consumed only in the working shift for manufacture of Ingot manufactured by the Appellant. As r....
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.... the basis of capacity of furnace and rolling mill. Since there was no provision in the law for determination of production on the basis of consumption of electricity, the entire proceeding is ab initio void. It is further submitted that it has been decided by the Hon'ble Tribunal in a series of cases that on the basis of consumption of electricity, production cannot be determined. The following decisions are cited in this regard to bring home the contention of the appellant that on the basis of consumption of electricity, no demand of duty can be raised. (a) 1996 (81) RLT 203 (Tri.) (b) 2003 (160) E.L.T. 213 (Tri.) (c) 1995 (76) E.L.T. 197 (Tri.) (d) 1994 (72) E.L.T. 777 (Tri.) (e) 2005 (190) E.L.T. 395 (Tri.) (f) 1998 (102) E.L.T. 139 (Tri.) (g) 1999 (35) RLT 92 (CEGAT) In the aforesaid verdicts of the Hon'ble Tribunal, it has been held that on the basis of consumption of electricity alone, no production can be determined. It has been further held that on the basis of assumption and....
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.... Two overhead cranes; (iv) Breaking of scrap to make suitable for melting; (v) Man-cooler; (vi) lighting and fans in the factory and within the office premises; (vii) Supply of electricity fans and light of the labours' quarters within the factory premises etc. Electricity is also consumed for repair work. Repair of the furnace as has been mentioned by M/s. Das Electric was, more or less, routine job and for this also consumption of electricity was necessary. Consumption of electricity is also dependent on the supply of electricity. In case the voltage was low and not in commensurate with the production of M.S. Ingots inasmuch as to reach the melting point more consumption of electricity is necessary. Further, interruption of electricity which is a regular feature in North Bengal was also responsible for higher consumption of electricity. In case of interruption of electricity, the molten metal solidifies and those are required to be heated and melted again. All these factors are also responsible for more consumption of electricity. These things have not at all been considered by t....
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....4. In a case of this nature wherein there is no material and documentary seizure but the entire case rests only on the excess consumption of electricity and a furnace log sheet, it is difficult to arrive at any meaningful conclusion of clandestine manufacture and removal. The work sheet reveals that the Department has computed the duty amount allegedly evaded on certain theoretical assumptions. The impugned order discloses the modality of ascertaining the alleged clandestine production and removal : "The calculation for such evasion was based on the following factors : (a) As per the FLS, the average production per hour came to 0.600 MT (Approx.) (b) Generator Input taken as 1300 KVA as stated by the authorized representative of the assessee in his statement 13-2-03. (c) Power Factor (P.F.) taken from bills. (d) KWH was from bills. Assessable value on the basis of the highest invoice price quoted by the said assessee during each year, and also confirmed by the authorized representative of the said assessee in his statement was taken as under :- Rs. 9,550/-per M.T. during 1998....
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....p; Bank statements (8) Direct physical evidence by way of seizure of goods and documents (9) No record private or statutory has been brought in evidence (10) no test-run production done in the unit for specified period noting the production and consumption of electricity and then.....the norm thereupon. 18. The Hon'ble Apex Court in Containers Corporation v. CEGAT - 1986 (24) E.L.T. 173 (S.C.) has held as follows : "It was difficult to see how power consumption can be related with the production of excisable goods." 19. In 1978 (2) E.L.T. (J172) - D Oudh Sugar Mills Ltd. v. UOI) the Supreme Court has held that Show Cause issued in the absence of evidence of removal of goods without payment of duty the findings are without any tangible evidence and are based only on inferences involving unwarranted assumption and are vitiated by an error of law. 20. In 2000 (124) E.L.T. 821 (Tribunal) = 1999 (35) RLT 92 (CEGAT) Kapadia Dyeing, Bleaching and Finishing Works v. Collr. of Central Exc, Surat, normal production to be determined by taking into consideration several parameters such as (i) installed capa....