TaxTMI 
TaxTMI 
2009 (2) TMI 645
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....al Excise officers on 30-1-2004, who conducted various checks and verifications. Statement of Shri Rajesh Rai, Production in-charge was recorded wherein he, inter alia, deposed as under :- On being asked about the content of raw materials required for production of one batch of finished, Shri Rai informed that for a batch of 9800 kgms. of DOP, the raw material required are 3700 kgms. of PAN and 6000-7000 kgms. of 2 EHA, small amount of catalyst and approximate 2500-3000 kgms. of recovered alcohol. For a batch of 11760 kgms. of DBP, the raw materials required are 6300 kgms. of PAN and 6500 kgms. of IBA, 50 kgms. of PTSA and approximate 1500 kgms. of recovered alcohol. For a batch of 8400 kgms. of DINP, the raw materials required are 3000 kgms. of PAN and 8500 kgms. of INA with other catalysts etc. 3. To verify the quantity of raw material consumption, manufacturing-process and the quantity of final product manufactured in a batch, the officers conducted the experiment in their presence, wherein raw materials were charged in reactor for manufacture of fresh batch of DOP. The result of such experiment conducted by the Department was that the various raw materials shown by t....
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....t them along with confirmation of interest and imposition of penalty upon all the appellants. The said show cause notice stand culminated into the impugned order passed by Commissioner. 8. As the arguments raised before us by the ld. Advocate are reiteration of the defence statements made by them before the adjudicating authority, which form part of the impugned order in a tabulated form, we reproduce the same :- (i) The department has considered theoretical formula for the manufacture of one batch of DOP and DBP instead of the actual utilization of the raw materials in the manufacture of above two products and recorded in RG-1 Register. (ii) The actual issuance of raw materials for the final products are different from batch to batch and it is on actual basis which is depending upon the several factors and circumstances for manufacture of each batch of the final products and theory and practice for manufacture of the final product is different. (iii) It is not the case of the department that the entire quantity of raw materials alleged to be excess consumed in the manufacture of final product ....
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....ers engaged in manufacture of different products. They, therefore, submitted that the consumption of raw materials varies from batch to batch and no standard formula can be applied for the manufacture of DOP & DBP manufactured by them. (vi) They submit that there is Annexure to SCN dt. 25-8-2004 whereby the department has relied upon only on RG23-A Pt.I wherein the raw materials received from the buyers are recorded. However, the department has ignored to rely upon the raw materials register maintained by them in the Form IV for the recovered Alcohol (2-EHA) received during the manufacture of DOP. (vii) They also submitted that the raw materials given in the statement of the Lab. Assistant varying from the quantum of raw materials actually found to be used by the officers at the time of experiment. This fact itself shows that theory and practical for receipt of the final product from the raw materials is quite different. (viii) They submit that for the manufacture of DOP they utilize fresh 2-EHA and PAN when the goods are to be manufactured of high-grade product and in that case no recovered alcohol is to be used and the ratio of the raw mater....
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....in its physical as well as chemical properties. Accordingly, he referred the reaction proportion between PAN and 2-EHA is 3.7:6.5 for DOP and the reaction proportion between PAN and IBA is 5.0:5.0 for DBP. While dealing with the appellant's contention that the actual utilization of raw material differs from batch to batch and depends upon several factors like quality of raw materials, moisture content in PAN etc., chemical reaction process, electricity fluctuation, grade and quality of finished product for which these are being used and nature of usage of the goods by their customers, he observed that the quality of their raw material does not affect the proportionate use of raw materials, though the same may be relevant for the quality of finished products. If raw material is of inferior quality, the finished product will also be of inferior quality. The same will not have any bearing on the quantum of the raw materials to be utilized. Accordingly, he came to a finding that the appellants have been showing excess issuance of raw materials than required for production, so as to cover up the raw materials which do not stand received by them. Accordingly, he confirmed the demand and ....
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....t. Ltd. v. CCE, Bangalore [2008 (225) E.L.T. 454 (Tri. Bang.)], it was observed that theoretical formulas based upon the consumption of the raw material cannot be made the basis for arriving at the correct production. The ratio of all the above decisions is to the effect that the charges of clandestine activities cannot be upheld on the basis of theoretical input-output norms. The same are required to be corroborative by production of independent evidences. Examining the case file from the above angle, we find that apart from the input-output ratio, which has been made the basis, there is no other evidences on record to show that the appellant either did not receive the raw materials, on which they have taken the credit or after receiving the same and availing the credit, the same stand removed by them in the open market. The statements given by the Director, Production In-charge and Lab. Assistant refer to the normal consumption of raw materials for production of one batch of their final product. There is no admission in the said statements to the effect that the raw materials were not actually received by them and they were showing excess consumption of the raw materials to ac....