TaxTMI 
TaxTMI 
2014 (7) TMI 654
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....09 Rs.13,21,96,993/- Rs.13,21,96,993/- 3 E/1417/09-MUM BHAGYALAXMI STEEL ALLOYS PVT. LTD. E/78/CEX/Commr/2009 Dated 31.08.2009 Rs.17,40,66,513/- Rs.17,40,66,513/- 4 E/1248/09-MUM GAJLAXMI STEEL PVT. LTD. E/71/CEX/Commr/2009 Dated 28.08.2009 Rs.10,27,32,129/- Rs.10,27,32,129/- 5 E/1247/09-MUM GOPALKISHAN JAJOO. E/71/CEX/Commr/2009 Dated 28.08.2009 NA Rs.2,50,00,000/- 6 E/1271/09-MUM MAHAVEER STEEL RE-ROLLING MILLS E/72/CEX/Commr/2009 Dated 28.08.2009 Rs.4,64,14,597/- Rs.4,64,14,597/- 7 E/1329/09-MUM MATSYODARI STEEL & ALLOYS PVT. LTD. E/74/CEX/Commr/2009 Dated 28.08.2009 Rs.9,22,13,861/- Rs.9,22,13,861/- 8 E/1331/09-MUM VIJAY B. MITTAL E/74/CEX/Commr/2009 Dated 28.08.2009 NA Rs.1,75,00,000/- 9 E/1332/09-MUM ADINATH CONCAST PVT. LTD. E/73/CEX/Commr/2009 Dated 28.08.2009 Rs.8,03,34,261/- Rs.8,03,34,261/- 10 E/1403/09-MUM JALNA SIDHIVINAYAK ALLOYS PVT. LTD. E/76/CEX/Commr/2009 Dated 28.08.2009 Rs.11,05,80,329/- Rs.11,05,80,329/- 11 E/1418/09-MUM NITIN R. KABRA E/78/CEX/Commr/2009 Dated 31.08.2009 NA Rs.4,35,00,000/- 1....
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....r final product without payment of duty during the respective periods of dispute. In all the cases the Revenue is relying upon the data relating to energy consumption. As per the Revenue the manufacturing units are showing more electricity consumption for production per MT of MS ingots. The case of the Revenue mainly rests upon the study conducted by Dr. N.K. Batra, Professor of IIT, Kanpur. As per the study conducted by Dr. N.K. Batra for the manufacture of 1 MT of MS Ingots the electricity consumption should be between 555 units and 1046 unit and the Revenue is also relying upon the opinion given by All Indian Induction Furnace Association and as per the opinion 820 KW of electricity energy is required for manufacture of 1 MT of MS Ingots. Based on both the opinions, the Revenue has taken 1026 KW per MT as standard for consumption and quantum of Ingots and consequently the demand of duty in all the cases. The case of the Revenue is that if 1026 KW of electricity is used for the manufacture of 1 MT of MS Ingots then during the period in dispute all the manufacturers should have manufactured the quantities on which demands were confirmed. Show Cause Notices were issued for demandin....
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....lay. This view is followed by the Tribunal in the case of CCE vs Venus Alloys Pvt Ltd vide order dated 20.03.2012 in appeal No. E/3191/07. 7. The Tribunal in the case of RA Casting supra has taken into consideration the basis for demand which is also in the present case and held that in absence of any other evidence demand cannot be made only on the basis of electricity consumption. The appellant also relied upon the decision of the Tribunal in the case of Amar Ispat Ltd vs CCE reported in 2009 (235) ELT 487. 8. In the present case, there is no evidence on record in respect of unaccounted raw material for the manufacture of unaccounted ingots and in respect of clandestine clearance. No experiment was conducted in the factories regarding actual consumption of electricity. In the case of appellant M/s SRJ Petty Steel Pvt. Ltd, the experiment was conducted for two hours in the factory and the Revenue has noted in the heat conducted that the total electricity consumption is 1496 units. The experiment was conducted on 4.03.2009. This experiment shows the electricity consumption for the manufacture of one MT is also most the same as the consumption of electricity as per the appella....
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....Ingots. Therefore, the production of ingots can be determined on the basis of units of electricity consumption. 13. Revenue also submitted that in some cases the Revenue obtained G7 forms from the Electricity Board which is the record of daily consumption of electricity. Units who were having furnaces are under statutory obligation to maintain such records in G7 Forms and in the present cases all of them have not maintained such record. 14. Revenue submitted that the Tribunal in the case of R.A. Castings (supra), the decision relied upon by the appellant, proceeded with the presumption that the law was well settled that electricity consumption cannot be the only factor for determining duty liability. The Hon'ble Allahabad High Court upheld the decision of the Tribunal in the case of R.A. casting (supra) on the ground that the findings of the Tribunal were based on materials on record and the findings cannot be said to be without any material and could not be held to be perverse. The Hon'ble High Court nowhere held that production of steel ingots cannot be determined on the basis of electricity consumed. 15. In respect of the experiment conducted by the excise offic....
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.... for manufacture of ingot. The Revenue is heavily relying upon the opinion of Dr. N.K. Batra, Professor of IIT, Kanpur. In that report, Dr. N.K. Batra opined that 555 to 1046 units is required to produce one MT of MS Ingots. Revenue also relied upon the opinion of All India Induction Furnace Association. Dr. Batra could not be cross-examined as he is no more. The appellants made a request to IIT, Kanpur to supply the copy of the opinion and the IIT, Kanpur vide letter dated 1.11.2007 informed that no such opinion is available in records. During arguments, Revenue produced the data of electric consumption in respect of the units for the period after the adjudication order to show that subsequently the manufacturing units were showing less electric consumption than during the period in dispute for the manufacture of per MT MS ingots. This shows that during the period in dispute, the manufacturing units were showing higher consumption of electricity to suppress the production. If this data is taken into consideration, the case of the Revenue still remains on the basis of electric consumption only. 22. Revenue also, during arguments, produced some orders passed by the Settlement Com....
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....the Executive Director, All India Induction Furnace Association, New Delhi; (v) 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E-LT, 1147. 20.1 From the perusal of these reports, we find that wide variations in the consumption of electricity have been reported for the manufacture of one MT of steel ingots. This renders the norm of 1046 units adopted by the Revenue as arbitrary. Why not adopt the norm of 1800 KWH/Tor 1427 KWH/T or 650 to 820 units/MT or 851 units/MT as per various reports referred to above or why not adopt some figure between 555 to 1046 units as norm as per Dr. Batra's report? 20.2 We note that no experiments have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing one MT of steel ingots. It is the basic philosophy in the taxation matters that no tax can be levied on the basis of estimation. In this case, there is added problem. Estimation of production fluctuates widly depending upon the fact as to which report is adopted. Tax is on manufacture and it is to be proved beyond d....
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....In the following case laws, it has been held that the consumption of the electricity alone is not sufficient to determine the production : (i) Pure Enterprises (P) Ltd. v. CCE, Rajkot-1999 (111) E.L.T. 407 (Tri.) (ii) Kapadia Dyeing Bleaching and Finishing Works v. CCB, Surat - 2000 (124) E.L.T. 821 (Tri.) (iii) A Adi Leathers (P) Ltd. v. CCE & C, Ahmedabad - 2001 (136) E.L.T. 1255 (Tri.- Mum.) (iv) Parshuram Cement Ltd. v. CCE, Lucknow- 2003 (160) E.L.T. 213 (Tri.-Del.) (v) Mukesh Dye Works v. CCE, Mumbai-VI - 2006 (196) E.L.T. 237 (Tri.-Mum.) (vi) Hans Castings Pvt. Ltd. v. CCE, Kanpur-1998 (102) E.L.T. 139 (T) (vii) M/s. Padmanabh Dyeing and Finishing Works v. CCE, Vadodara - 1997 (90) E.L.T. 343 (T) (viii) M/s. Madhu Products v. CCE, Hyderabad -1999 (111) E.L.T. 197 (T). 22. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and ....
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....(vi) M. Veerabadhran & others v. Commissioner of Central Excise, Chennai-II reported in 2005 (182) E.LT. 389 (T) = 2005 (98) ECC 790 (T). 23. The Tribunal has consistently taken the view that wherever electricity consumption alone is adopted as the basis to raise demands, the order of the lower authorities have been held to be unsustainable in law and set aside and the Revenue had been directed to carry out experiments in different factories on different dates to arrive at the average to be adopted as a norm, which can be followed thereafter and the Revenue in the present case not having conducted any experiment whatsoever cannot be permitted to justify the demands raised. It will be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for future. The impugned demand based merely on assumptions and presumptions cannot, therefore, be sustained nor could be justified both on facts and in law. 24. The law is well settled that in every case of alleged clandestine removal, the onu....
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....red. 4. So far as the various after allegations relating to the fictitious firms and the income from the share trading, the Tribunal recorded the finding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, ii was incumbent upon the Revenue to produce them as well as the investigating officer for cross-examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods. 25. Against the decision of the Hon'ble High Court, the Revenue filed SLP in the Hon'ble Supreme Court and the same was dismissed after condoning the delay reported as CCE us R.A. Castings Pvt Ltd reported in 2011 (269) ELT A 108. In the case of Amar Ispat (supra) the Tribunal also held that only electricity consumption cannot be made basis to demand. 26.F....
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.... Revenue in the manufacture of clandestinely removed MS Ingots. The Revenue is assuming 1026 units are used for the manufacture of one MT of MS Ingots. Demand cannot be made on the basis of assumption in the absence of evidence to support allegation of clandestine removal. 30. The issue regarding undisclosed income in the Balance-sheet is also decided by the Tribunal in the case R.A. Casting (supra). The Tribunal held that in absence of evidence that undisclosed income in respect of clandestinely removed goods demand cannot be made. Therefore, the amounts which were disclosed to the Income Tax Department cannot be held to be the sale proceeds of clandestinely removed goods in absence of such evidence. 31. In the present appeals we find that evidence relied upon in the Show Cause Notices and in the adjudication orders is the same as in the case of R.A. Castings Put Ltd (supra) such as opinion of Dr. N.K. Batra and All India Induction Furnace Association. The same opinion is taken into consideration for confirming the demands. As the Tribunal in the case of R.A. Castings Put Ltd (supra) set aside the demand, based on above mentioned opinions, hence the ratio of above decision i....
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....s, step by step, number of simplifications were done in these procedures. Increasingly higher level of trust was bestowed on the manufacturers. 35. In 2002, new Central Excise Rules, 2002 were notified by the Government. Under the new Rules, entire scheme of control has been done away with and full trust is reposed in the manufacturer. Manufacturer's own records are accepted instead of statutorily prescribed registers/forms. Even the visit of Central Excise officials to any factory are restricted and controlled by internal administrative mechanism. Under Central Excise Rules 2002, Rule 6 deals with assessment of duty, Rule 8 deals with manner of payment, Rule 9 deals with the registration, Rule 10 deals with the daily stock account, Rule 11 is relating to goods to be removed on invoice and Rule 12 is relating to filing of returns. If one goes through these rules, it would be found, in essence, a manufacturer is required to take registration only once (at the time of starting the factory). Manufacturer can produce the goods without any supervision, interference, or control of Central Excise officials. Law requires manufacturer to maintain daily stock account. Rules do not pre....
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..... reasons for such abnormalities, manufacturer assessee does not provide any specific reasons/explanations to such abnormalities. The central excise officer thereafter based upon available information and best judgment demands certain central excise duty, which according to him is the minimum duty under-assessed/evaded by the manufacturer. During the adjudication/appellate proceedings, again the manufacturer assessee does not give any specific/cogent explanation to the glaring abnormalities but only questions the central excise officers the basis of computations and that Central Excise Officer has failed to produce evidence relating to other aspects such as procurement of other raw material or clearance of finished goods or other technical reasons so that no step towards finding out the truth can be ventured. Incidentally, returns even do not envisage giving details of supplier or quantity of raw materials or other purchases or full details of finished goods or buyers. 38. In all the appeals, appellants are manufacturer of M.S. Ingots, which are produced by Induction Furnace method. Main inputs are (i) scrap/sponge iron, and (ii) electricity. M.S. Ingots in turn are used in the ....
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....ots & Billets valued at Rs. 47,75,200/- involving duty of Rs. 7,79,313/-with the sole intention of evading C. Ex. Duty involved therein. SCN No. DGCEI/ MZU/ I & 1 S 'C'/ 12(4)34/ 2007 dated 04.05.2007, referred at Para 9 of the SCN & at Para 8 D of the Addendum to SCN issued by CCE, Aurangabad. d) Clandestine clearance in above case was admitted before the Department as well as Settlement Commission. In Settlement Commission Order No. 460 to 477/ Admission copy, Final Order/ CEX/ JNA/YDN/GMD/SBG/2007 and 478/Final Order CEX/KNA/2007 dated 12.12.2007, the appellant accepted duty liability of Rs. 7.79 Lakhs . e) Even before Income Tax authorities, the appellant accepted their revised assessment indicating suppression production of Ingots. Commissioner of Income Tax (Appeals) confirmed net addition of income of Rs. 23.5 lakhs on account of suppressed production of ingots for assessment years 2001-02 to 06-07. M/s Kalika Steel Alloys Pvt Ltd. a) Even if only cost of electricity and raw material is added as per Balance/Sheet, it comes to 130% of sale price of ingots shown to have been manufac....
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....urposefully grave act of clandestine removal of 153 M. T.s of M.S. Ingots without payment of C. Ex, Duty involving duty of Rs. 7,79,313/-with the sole intention of evading C. Ex. Duty involved therein. (iii) As per Panchanama for search carried out by DGCEI on 16 to IS AUG.2006 at the factory premises - a) Physical Stock of raw materials i.e Sponge Iron, Cast/ Pig Iron, Scrap was founded to be 799.180 M.T. as against book balance of 915.225 M.T. & b) The physical stock of M.S. Ingots was 47.340 M.T. as against book balance of 80.945 M.T., resulting into shortages of 116.045 M.T. of raw materials & 33.605 M.T. of M. S. Ingots. (iv) From the Private Records in the form of 'Kachha Chitti' recovered during search from Shri. Girish Keshav Barwar, Supervisor of M/s KSAPL, revealed clandestine removal of 485.700 M.T. of M.S. Ingots from M/s KSAPL to M/s KRRPL vide vehicle no. MCB 8888. This fact was also confirmed in his statement dated 16.08.2006 under Section 14 of the Central Excise Act, 1944 (referred in the SCN)by Shri. Suml Prabhudas Godhwani, Accountant of M/s KSAPL. &....
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....) Even if cost of electricity & raw material is added as per Balance Sheet, it comes to 93% of sale price of Ingots shown having been manufactured which hardly leaves any scope for other expenses like wages, overheads, interest and profit etc. making the manufacturing commercially unviable and unsustainable in the long run. b) Nil/ production was shown on a number of days while electricity consumption was very high indicating that the appellant was engaged in suppression of production. M/s Gajlaxmi Steel Pvt. Ltd. Date Electricity Consumed (in units) Production of Steel Items 26.02.07 37800 Nil 12.03.07 42060 Nil 19.03.07 79020 Nil Total 158880 c) The sanctioned auxiliary load was only 9.11% of total sanctioned load but claimed to be 20% by appellant in their section 14 statement indicating their intention not to disclose true facts to Department. d) (i) Shri. Narender Ramvilas Agarwal, Ex-Director, M/s Pawan Re-Rolling Mills PVt Ltd in his statement dated 19.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the S....
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....veer Steel & Re-Rolling Mills Pvt. Ltd. Date Electricity Consumed Production of Steel Items (in units) 12.09.03 27296 Nil 03.10.03 54656 Nil 10.10.03 51456 Nil 05.11.03 29888 Nil 07.11.03 54304 Nil 21.11.03 85440 Nil 20.02.04 27636 Nil 28.02.04 75808 Nil 07.03.04 2880 Nil 27.08.04 30176 Nil 17.09.04 27808 Nil 24.09.04 29056 Nil 08.10.04 31168 Nil 01.11.04 50144 Nil 12.11.04 832 Nil 31.12.04 22752 Nil 07.01.05 22944 Nil 26.01.05 30112 Nil 04.02.05 45216 Nil 29.07.05 23520 Nil 11.11.05 28224 Nil 18.11.05 23008 Nil 15.03.06 992 Nil 20.10.06 46240 Nil 21.10.06 7872 Nil 26.01.07 10272 Nil 04.03.07 44416 Nil 11.05.07 1664 Nil 14.05.07 2240 Nil 29.06.07 50880 Nil Total 938880 c) The sanctioned auxiliary load was only 10.95% of total sanctioned load but was claimed to be 20% by appellant in their section 14 statement indicating their intention no....
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....r B/S, it comes to 113% of sale price of ingots shown to have been manufactured, malting the manufacturing commercially unviable and unsustainable in the long run. Though the unit is stated to be running in losses, as per Affidavit dated 06.08.2013 filed before the Tribunal, a 12 M .T. capacity melting furnace purchased from M/s Electrotherm India Ltd which is in operation of manufacturing of ingots from 2.08.2005 onwards. b) The sanctioned auxiliary load was only 8% of total sanctioned load but was claimed to be 25%-30% by appellant in their section 14 statement indicating their intention not to disclose true facts to the Department.. c) (i) Shri. Narender Ramvilas Agarwal, In-Charge, M/s Mahalaxmi Re-Rolling Mills &Shri. Vijay Laxmi Narayan Agarwal, Propritor, M/s Vijay Rolling Mills( Now M/s Mahalaxmi Re-Rolling Mills) in their statement dated 19.01.2007 & 25.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) had stated that they had received 45 M.T.s of M.S. Ingots from M/s Adinath Concast Pvt. Ltd. (ii) Shri. Narender Khanyalal Pahade, Manager, M/s Adinath Stee....
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.... c) NIL production was shown on a number of days while electricity consumption was very high as is clear from the Table below: Date Electricity Consumed in units) Production of Steel Items 04.10.03 66015 Nil 06.10.03 61335 Nil 13.10.03 73305 Nil TotaL 200655 d) (i) Shri. Sunil R. Agarwal, Partner, M/s Roopam Steel Re-Rolling Mills Pvt Ltd in his statement dated 23.12.2006, 16.01.2007 & 23.03.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) stated that they had procured 263.995, 63.590 & 5.110 M.T.s of M.S. Ingots from M/s Jalana Siddhi Vinayak Alloys Pvt Ltd without payment of C.Ex. duty. (ii) S/ Shri. Dinesh O. Agarwal, Umesti O. Agarwal, Directors , M/s Jalana Siddhi Vinayak Alloys Pvt Ltd & Shri. Sunil R. Agarwal, Authorised Person, M/s Jalana Siddhi Vinayak Alloys Pvt Ltd in their statements dated 11.01.2007, 24.01.2007 & 23.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) stated that they had cleared 265, 65 & 5.500 M.T.s of M.S. Ingots without payment of C.Ex. duty & had received the payments for the sam....
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....sp; (d) Clandestine clearance in above case was admitted before the Department as well as Settlement Commission. In Settlement Commission Order No. 460 to 477/ Admission copy, Final Order/ CEX/ JNA/YDN/GMD/SBG/2007 and 478/Final Order CEX/KNA/2007 dated 12.12.2007, the appellant accepted duty liability of Rs. 6.62 Lakhs. M/s Mauli Steel a) Even if only cost of electricity and raw material is added as per Balance Sheet, it comes to 107 % of sale price of ingots shown to have been manufactured making the manufacturing commercially unviable and unsustainable in the long run. b) The sanctioned auxiliary load was only 8.83% of total sanctioned load but claimed to be 30% by appellant in their section 14 statement indicating their intention not to disclose true facts to the Department. c) Credit balance written off in Balance Sheet, Rs. 7.97 lakhs in 2004-05 and 35.73 lakhs in 05-06 but no documentary evidence produced. d) (i) Shri. Mukesh D. Gupta, Director, M/s K. M. Re-Rolls Pvt Ltd in his statement dated 23.12.2006 under Section 14 of the Central Excise Act, 1944 (referred in ....
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....nvolving duty of Rs. 7,79,313/-with the sole intention of evading C. Ex. Duty involved therein. d) Clandestine clearance for above case admitted before before the Department as well as Settlement Commission. Settlement Commission Order No. 460 to 477/ Admission copy, Final Order CEX/JNA/YDN/GMD/SBG/ 2007 and 478/Final Order CEX/KNA/2007 dated 12.12.2007, the appellant accepted duty liability of Rs. 21.99 Lakhs. M/s Om Sairam Steel a) Even if only cost of electricity and raw material is added as per Balance Sheet, then it comes to 132% of sale price of ingots shown to have been manufactured making the manufacturing commercially unviable and unsustainable in the long run. b) The sanctioned auxiliary load was only 7% of total sanctioned load but claimed to be 25% - 30% by appellant in their section 14 statement indicating their intention not to disclose true facts to the Department.. c) (i) Shri. Dinesh Satyanarayan Bharuka, Director, M/s Rutuja Ispat Pvt Ltd in his statement dated 08.01.2007 & 23.03.2007 under Section 14 of the Central Excise Act, ....
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....ven if cost of electricity & raw material is added as per Balance Sheet, it comes 98% of sale price of Ingots shown having been manufactured which hardly leaves any scope for other expenses like wages, overheads, interest and profit etc. making the manufacturing commercially unviable and unsustainable in the long run. b) The sanctioned auxiliary load was only 15.35% of total sanctioned load but claimed to be 36% by appellant in their section 14 statement indicating their intention not to disclose true facts to the Department. c) NIL production shown on a number of days despite considerably high electricity consumption. Appellant: M/s Ahmednagar Alloy Pvt. Ltd. Date Electricity Consumed (in units) Production of Steel Items 09.07.05 27440 NIL 23.07.05 28420 NIL 30.07.05 39440 NIL 06.08.05 39460 NIL 13.08.05 35280 NIL 15.08.05 30500 NIL 20.08.05 34800 NIL 27.08.05 21860 NIL 29.08.05 36560 NIL 03.09.05 35140 NIL 10.09.05 35340 NIL 17.10.05 36140 NIL 24.09.05 37380 NIL 01.10.05 26220 NIL ....
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....Mahalaxmi Re-Rolling Mills & Shri. Vijay Laxmi Narayan Agarwal, Propritor of M/s Vijay Rolling Mills (Now known as Mahalaxmi Re-Rolling Mills) in their statements dated 19.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) had admitted that they had received 70 M.T.s of M.S. Ingots from M/s Rishi Steel & Alloys Pvt Ltd without any bill in cash. (ii) Shri. Dinesh Satyanarayan Bharuka, Director, M/s Rutujalspat Pvt Ltd in his statement dated 08.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) had stated that they had received 125 M.T.s of M.S. Ingots from M/s Rishi Steel & Alloys Pvt Ltd without the cover of C.Ex. invoice & without payment of C.Ex. duty. (iii) Shri. Radheshyam R, Agarwal, Director, M/s Rishi Steel & Alloys Pvt Ltd in his 2 statement dated 19.01.2007 under Section 14 of the Central Excise Act, 1944 (referred in the SCN) had stated that they had cleared aforesaid 195 M.T.s of M.S. Ingots from without the cover of C.Ex. invoiced without payment of C.Ex. duty. Thus, M/s Rishi Steel & Alloys Pvt Ltd had admitted under Section 14 of CEA,1944, committi....
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....the conclusion that return filed by the appellants and hence self-assessment made by the appellants do not reflect the TRUTH and appellants have indulged in suppression of production and clandestine clearance. For estimating the production, they mostly relied upon data relating to energy consumption, which were obtained from MSED or appellants themselves. According to Revenue, electricity in the range of 555-1026 units are required for production of one M.T of M.S. Ingots. This was based upon a study conducted by Prof. N.K. Batra of IIT, Kanpur. Reliance was also placed on the opinion given by All India Induction Furnace Association who have opined that 820 units of electricity would be required to manufacture one M.T. of M.S. Ingots. The manufacturer of the induction furnace M/s Electrotherm (India) Ltd, vide their letter dated 22.6.2006 addressed to a manufacturer viz M/s Trimurthi Ispat Ltd has clarified the range of electricity consumption as 600 to 625 unit per MT without sponge iron and 660 to 690 units per MT with 50% sponge iron. The average of range indicated by Prof. Batra would be approximately 800 units, which is very close to 820 units indicated by the All India Furnac....
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....305 1022 1024 1019 1021 1014 1026 6 M/s Matsyodhari Steel Pvt. Ltd. Jalna 1432 1020 1024 1020 1036 1017 1023 M/s Adinath Coocost Pvt. Ltd. Jalna 1353 1073 102S 1028 1034 1025 1011 8 M/s Jalna Siddhivinayak Alloys Pvt. Ltd. Jalna 1494 1021 1022 1021 1019 1018 1021 9 M/s Metarolls & Commodities Pvt. Ltd. Jalna 1194 1024 1023 1022 1016 1024 1025 10 M/s Mauli Steel Pvt. Ltd. Jalna 1774 1075 1026 1015 1030 1020 1022 11 M/s Nilesh Steel S Alloys Pvt. Ltd. Jalna 1265 1023 1019 1016 1019 1001 1018 12 M/s Om Sai Ram Steel & Alloys Pvt. Ltd. Jalna 1266 1017 1022 1026 1266 1026 1025 13 M/s Saptashringi Alloys Pvt. Ltd. Jalna 1367 1091 1025 1026 1029 1017 1022 14 M/s Rishi Steel & Alloys Pvt. Ltd. Jalna 1739 1038 1028 1030 1470 1118 1025 15 M/s Regent Steel Pvt. Ltd. Jalna 1100 1033 1025 1026 1025 1025 1025 43. Both sides were heard extensively on number of days. Learned senior advocate for the appell....
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.... indicating the suppressed production and clearance of goods. This can be based upon information/intelligence. Even in such cases it is not necessary that all the documents or complete details are recovered. Moreover, there can be situations where though prima facie it is established that manufacturer has suppressed the correct quantum of production. However, from the records maintained by the manufacturer (which are not truthful), it is not possible to know precisely the quantity of the suppressed production of goods and thereafter cleared without payment of duty or recording the details in record. In such a situation what is required to be done. Whether in the absence of precise details, untrue and incorrect self assessment/returns to be accepted and no duty can be demanded; or based upon the available details Central Excise official resorts to best judgment-assessment. Undoubtedly before resorting to the best judgment-assessment, Central Excise officer will be required to furnish details to the manufacturer and the manufacturer would have an opportunity to rebut the method of computation or explain the factors/information. 45. It is, by now, an established law that taxation i....
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....ds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(l)(a), however, it seems that the intention of the legislature is to emphasize the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(l)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023: "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for ....
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....Alloys Pvt. Ltd. 153680.544 102083.623 (66.42%) 51596.921 (33.57%) 3 M/s Bhagyalaxmi Steel Alloy Pvt Ltd 142137 82973 (58.38%) 59265 (41.72%) 4 M/s Gajlaxmi Steel Pvt Ltd 101026.491 64390.918 (63.74%) 36635.576 (36.26%) 5 M/s Mahavir Steel Re-rolling Mills Pvt. Ltd. 73365.763 56257.675 (76.68%) 37108.088 (23.31%) 6 M/s Matsyodari Steel & Alloys Pvt. Ltd. 99756.672 63937.345 (62.08%) 37819.327 (37.91%) 7 M/s Adinath Concast Pvt Ltd 62080.64 36249.49 (58.39%) 25831.16 (41.61%) 8 M/s Jaina Sidhivinayak Alloys Pvt. Ltd 116517.404 76949.345 (66.04%) 39568.060 (33.95%) 9 M/s Metarolls & Commodities Pvt, Ltd 178254.08 134981.62 (75,72%) 43272.08 (24.27%) 10 M/s Mauli Steel Pvt. Ltd. 104066.329 63856.935 (61.36%) 40209.394 (38.63%) 11 M/s Nilesh Steel & Alloys Pvt. Ltd. 150761 94567 (62.72%) 56193 (37.27%) 12 M/s Ahmednagar Alloys Pvt. Ltd 51453.988 49488.342 (96.17%) 1965,646 (3.82%) 12 M/s Omsairam Steel & Alloys Pvt. Ltd 132146.64 86371.45 (65.36%) 45775.19 (34.63%) 13 M/s Saptashrungi Alloys Pvt Ltd 93634 ....
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....i) Pure Enterprises (P) Ltd. v. CCE, Rajkot - 1999 (111) E.L.T. 407 (Tri.) (ii) Kapadia Dyeing Bleaching and Finishing Works v. CCB, Surat - 2000 (124)ELT 821 (Tri.) (iii) A. Arti Leathers (P) Ltd. v. CCE & C, Ahmedabad - 2001 (136) E.L.T. 1255 (Tri.-Mum.) (iv) Parshuram Cement Ltd. v. CCE, Lucknow - 2003 (160) E.L.T. 213 (Tri.-Del.) (v) Mukesh Dye Works v. CCE, Mumbai-VI - 2006 (196) E.L.T. 237 (Tri.-Mum.) (vi) Hans Castings Put Ltd. v. CCE, Kanpur - 1998 (102) E.L.T. 139 (T) (vii) M/s. Padmanabh Dyeing and Finishing Works v. CCE, Vadodara - 1997 (90) E.L.T. 343 (T) (viii) M/s. Madhu Products v. CCE, Hyderabad - 1999 (111) E.L.T. 197 (T)." 48. The essence of Tribunal's decision in the case of R.A. Castings is that Rule 173E prescribes a procedure which could be followed by the Commissioner and fix a norm for electricity consumption. The norm has to be fixed and notified to the manufacturer. It is only after following this procedure that the demand of duty based upon the electricity consumption can be made. This procedure i....
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.... Kanpur vs CCE - 1998 (102) ELT 139 (TJ) has observed as under: "8. Heard the submissions of both sides. We note that the basic issue in all the three appeals is the same as to whether there was sufficient evidence to prove that power consumption per tonne was based on evidence or records seized from the appellants or was based on any experiment conducted in the premises of the appellants. We have heard the submissions made by both sides and we note that in all the three cases, neither there was a norm of consumption of power nor was any evidence in the form of private records seized, nor was based on any norm fixed by the Department under Rule 173E. We are, therefore, of the view that the matter is fit to go back by way of remand since there are no findings based on records in support of the conclusion arrived by the Collector. We, therefore, set aside the impugned order and remand the matter to the Collector of Central excise concerned for de novo decision after taking into account the pleas made by the appellants in regard to power consumption and, if necessary, to conduct experiments spread over a period of 10 days in the factory of the appellants and, if ....
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....and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1) of the Act but no case has been made out in the show cause notices or, in the adjudication order that there were any mis-statement, suppression of fact or fraud on the part of the respondents. No substantial question of law arises from the order of the Tribunal." (Emphasis supplied) 52. It would thus be seen that the Hon'ble Allahabad High Court has found that no substantial question of law is arising out of the order of the Tribunal. The Hon'ble Allahabad High Court also not decided or laid any law in the said judgment. The Hon'ble Allahabad High Court has also noted the Tribunal's observation that Rule 173E mandatorily requires the Commissioner to prescribe/fix the norms for electricity consumption and notify the same to the manufacturer. We also note that the Hon'ble apex court has not gone into any question of law but dismissed the petition for special leave to appeal. We are therefore of the view that the said judgment of the Tribunal in the case of R.A. Castings has to be examined in the facts of each case and cannot be app....
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....ds. 54. During the initial arguments, the learned senior advocate for the appellants was asked by this Bench 'that since electricity is a very important and is one of the two main inputs viz scrap/sponge iron and electricity is critical component in the manufacture of MS ingots using induction furnace whether appellants had any correspondence with the manufacturer of induction furnaces about the electricity consumption, as one would normally expect such correspondence (it was possible that the claim of the manufacturer about electricity consumption may be exaggerated), the learned senior advocate, during the next hearing, submitted affidavits of all the appellants stating that (i) the furnace manufacturer had not given any commitment for any specific electricity consumption in respect of furnaces supplied to them; (ii) neither invoice nor any other documents received from the furnace manufacturer at the time of purchase showed any range of electricity consumption per ingots produced; they also stated that furnace supplier M/s Electro Thermo Systems Ltd was contacted by them in March 2013. Further M/s Electro Therm Systems Ltd has not submitted any specific electricity consum....
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....er has to be exercised sparingly by judiciary. The power has to be used for bringing out TRUTH so that Justice triumphs. In the present case, the so-called additional evidence is nothing but Appellants' own data relating to power consumption of the subsequent period, when Revenue started keeping general surveillance. Moreover, data is not for one or two days but for about six months. In fact, in our view, this data is a far better substitute for what was earlier envisaged under Rule 173E of Central Excise Rules, 1944. This data which is appellant's own, goes to the very root of dispute. Appellants were given ample chance to rebut the data or provide explanation for the same. However, no explanation whatsoever is coming forward. Revenue has submitted these in rebuttal to the affidavits submitted by various appellants. 55.3 We have gone through the case laws listed earlier mentioned by Ld Senior Advocate for the appellants. In the case of Mohinder Singh Gill vs CCE, New Delhi AIR 1978 - SC - 851, certain action was taken by the Chief Election Commissioner based upon the inputs from the Returning Officer, Election Observer etc. The said action of CEC was under challenge bef....
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.... 55.5 In the case of Bata India Ltd, Calcutta (Supra) the issue was relating to valuation of shoes. Appellants' claim was that Bata Brand shoes were sold through their own outlets alone. At the Tribunal stage, Revenue wanted to produce an evidence that Bata brand shoes are also sold in the wholesale lot to independent buyers. Evidence was for a different period. In those circumstances that Tribunal had taken a view that evidence is not contemporaneous in nature and therefore, is not admissible. 55.6 In the case of CCE vs Vaigai Thread Processors Ltd (Supra) Revenue wanted to produce additional test results, in addition to what was produced during adjudication, which were not there before the lower authorities. It is in these circumstances that the Tribunal refused to admit the additional evidence. 55.7 In the case of Prakash Pipe & Industries Ltd, certain additional evidence in the form of opinion was sought to be produced. The Tribunal observed that this additional evidence is not in continuation of the previous opinion obtained by the parties. Since the previous opinion did not refer to exemption notification number 340/86 and related to import trade control aspect o....
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....errily because they had the means to afford it. We cannot countenance such a demand and must deprecate it strongly. We do so and reject both the applications. To allow them would encourage multiplicity of hearings and create a wrong precedent." 55.10 Facts and circumstances of all the above cases are totally different than the facts and circumstances of the present case. In the present case, the so-called additional evidence are nothing but the electricity consumption details of the appellants themselves. These are after booking and adjudication of the present set of cases. This data is undoubtedly available to the appellants themselves. The data is for a period of six months and would take care of all general explanation. The data goes to the root of the matter. We also note that the learned senior advocate for the appellants did not oppose the miscellaneous application. However in the written submissions and during arguments he tried to argue that these details should be ignored. 55.11 Under the circumstances, we do not find any reason to ignore this data. Learned A.R. also submitted a catena of case laws (numbering 32) to support that additional evidence can be taken by th....
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....y other substantial cause, [clause (b) of sub-rule (1)]. 13. It is plain that under clause (b) of sub-rule (1) of Rule 27 order 41 C.P.C., with which we are concerned in the instant case, evidence may be admitted by an appellate authority if it 'requires' to enable it to pronounce judgment 'or for any other substantial cause'. The scope of the Rule in particular of clause (b) was examined way back in 1931 by the Privy Council in Parsotim Thakur v. Lal Mohar Thakur - AIR 1931 PC 143. While observing that the provisions of Section 107 as elucidated by order 41 Rule 27 are clearly not intended to allow litigant, who has been unsuccessful in the lower court, to patch up the weak parts of his case and fill up omissions in the court of appeal, it was observed as follows: "Under clause (l)(b) it is only where the appellate court 'requires it, (i.e. finds it needful) that additional evidence can be admitted. It may be required to enable the court to pronounce judgment or for any other substantial cause, but in either case it must be the court that requires it. This is the plain grammatical reading of th....
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....be kept in view while dealing with applications under order 41 Rule 27 and order 6 Rule 17 C.P.C." 56. The learned senior advocate for the appellants quoted the following case laws to argue that evidence of period other than period of dispute are irrelevant: (i) CCE, Coimbatore vs Cambodia Mills Ltd - 2001 (128) ELT 373 (Mad), (ii) M. Veervardan vs CCE, Chennai 2 - 2005 (182) ELT 389, (iii) Emami Ltd vs CCE, Kolkata - 1 2002 (148) ELT 1238 (iv) Reckit & Colman of India Ltd vs CCE - 1996 (88) ELT 641 (SC) 56.1 We have gone through the said judgments. In the case of Cambodia Mills Ltd, appellant was manufacturing yarn of different counts and duty varied with count and goods manufactured on a particular date was found to be of different count and department wanted to use the test results of the goods produced for the other period also. In this context the Tribunal observed as under: "5. In so far as the quantity in respect of which the additional demand could be made was for all the quantities manufactured subsequent to the date of the lots drawal of the sample on 17-7-1....
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....t at every stage from the show cause notice onwards, was that the said product was a preparation based on starch. having come to the conclusion that the said product was not a preparation based on starch, the Tribunal should have allowed the appeal. It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet. It is upon this ground alone that the appeal must succeed." 56.5 Thus in our view, none of the four case laws quoted by the Ld Senior Advocate help in the facts and circumstances of the case. Here, all that is being said is that demand raised by Revenue is supported by appellants own conduct/data for the period subsequent to that of present proceedings. By not permitting such data, we will only be obstructing the TRUTH to come out, Such a proposition has to be rejected. 57.1 In Show Cause Notices issued to present appellants, there are reference to other Show Cause Notices issued to the appellants, wherein appellants during investigations have admitted clandestine clearance in their statements under Section 14 of the Central Excise Act. Appellants h....
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....ve view of the matter, Issue Nos. 2 and 3 are answered in the negative, that is, in favour of the assessee and against the Revenue, and it is held that the mere filing of application before Settlement Commissions under Section 32E of the Act for waiver of interest, penalty and immunity from prosecution and suo motu payment of duty as per se construed as admission of the allegations in the show cause notice as regards the fraud, collusion etc. Inference in this regard may be drawn from the contents of the applications, that is, pleadings of the applicant and finding of the settlement Commission, if any. Issue No. 1 pertains to the merits of the case and parties generally agreed that the same may be decided by the Division Bench at the stage of final disposal of the appeal." 58.3 The facts in second case were that the appellant had taken Cenvat credit on the strength of supplementary invoice issued by Chennai Petroleum Corporation Ltd (CPCL). Against CPCL department had issued Show Cause Notice for demanding additional duty on the goods alleging that the noticee (CPCL) had suppressed material facts with intent to evade duty. CPCL had approached the Settlement Commission and accept....
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.... able to meet the inferences arising therefrom. In our opinion, the High Court was right in holding that the burden of proof had shifted on to the appellant after the Customs authorities had informed appellant of the results of the enquiries and investigations." 59.3 We also note that Hon'ble Supreme Court in the case of Collector of Customs vs D. Bhoormull - reported in 1983 (13) ELT 1546 (SC) has laid down principles relating to burden of proof, as under: "It cannot be disputed that in, proceeding for imposing penalties, under Clause (8) of S.167 to which s. 178-A does not apply, the, burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope And the nature of the onus, cast by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degr....
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....ate. 60.2 First case quoted is relating to CCE, Chandigarh vs Nachiketa Paper Ltd - 2008 (225) ELT 194 (P & H). In the said case, officials visited the unit and certain shortage of raw materials and finished goods were found. Respondent paid duty relating to the said goods. The issue before the Hon'ble High Court was relating to the imposition of penalty on the respondent. In this context the Tribunal had taken a view that there is no evidence relating to fraud, collusion or wilful misstatement or suppression of facts for imposing penalty under Section 11AC, which was upheld by the Hon'ble High Court. 60.3 Second case quoted in CCE & ST, Daman vs Nissan Themoware Pvt Ltd - 2011 (266) ELT 45 (Guj) . In this case departmental official visited the respondent's unit. On stock taking they found shortage of one raw material and all other raw materials were found to tally. Department took the view that the said raw material has been used in the manufacture of the final goods and accordingly duty was demanded on the final product which was paid by the respondent. Department issued Show Cause Notice for duty as also penalty. The Tribunal taking into fact that all the raw m....
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....iction and the said case law has no application for determining the duty liability which is the civil obligation. The standard of evidences in the two proceedings are entirely different. 60.8 Another case quoted is relating to K. Rajagopal vs CCE - 2002 (142) ELT 128. In the said case, certain private note books were recovered during the search from the premises of the appellant. At the time of raid and the seizure of the note book, the accountant was very much present. On the basis of the said note book the department came to the conclusion that certain raw materials have been purchased and in turn are used in the manufacture of goods (fire works) and duty was demanded. The Tribunal took the view that raw materials were such which are covered under Explosives Act and can be supplied only by a person having license under the Explosives Act. Moreover the said raw materials are required to be purchased only through Governmental sources. No investigation was done by the department to know the source of such raw materials and therefore demand of duty on fire works presumed to be manufactured from such material was set aside. 60.9 Another case quoted in Ghodavat Pan Masala Product....
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....ther problems being faced by them. 60.14 In none of above mentioned cases, facts and circumstances are comparable to the facts and circumstances in the present cases. We have to therefore examine the impugned orders with reference to details of present case alone. (i) On the contrary, we find that Hon'ble Supreme Court in the case of Triveni Rubber and Plastics vs Commissioner of Central Excise, Cochin reported 1994 (73) ELT 7 (SC) has held that demand arrived at by the assessing normal production on the basis of electricity consumed cannot be faulted. In facts and circumstances of the present cases, we find that this decision is squarely applicable to the present cases. Hon'ble Supreme Court observed: "4. It is argued by Mr. Anam that the only basis of the estimate of the production is the consumption of the electricity during the said period. What happened in this case is this : The Collector took the period from October 1979 to May 1980 as the base period. He ascertained the quantity of tread-rubber produced and the quantity of electricity energy consumed. Adopting the ratio between the consumption of....
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....use Notice of during arguments or from various open sources, or electricity consumed in the subsequent period, etc.- (i) Letter of Induction Furnace Manufacturer's dated 22.6.2006, indicates the energy consumption as follows: (a) with 100% clear scrap -600-625 kwh/ton; (b) with 60% sponge iron 600-695 kwh/ton. Appellant's have contended that M/s Electrotherm have gone back on their letter. We are of the view that this is only to save their buyers of furnace from the present cases. We also note that during the course of hearing, Revenue obtained a general leaflet of the same manufacturer. This leaflet indicates power consumption with difference frequency and voltages as under: KW Frequency (Cycles) Input KVA Melt Rate Steel @1650 C Iron @ 1480 C 450 1 kHz 535 875 970 600 1 kHz 700 1165 1280 750 0.5kHz 880 1440 1580 1000 0.5kHz 1175 1915 2110 1200 0.5kHz 1410 2300 2530 1500 0.5kHz 1725 2870 3160 1800 0.5kHz 2085 3445 3790 &nb....
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....on consumption of electricity per M.T. of Steel Ingots and it was noticed that the consumption of 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." (x) In the case of Bhagwati Ispat Pvt Ltd reported in 07-08-2006, average consumption of electricity during Sept. 1997 to March 1998 was found to be 861 units PMT while for whole year....