TaxTMI 
TaxTMI 
2015 (5) TMI 568
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.... capacity per day carrying out directly reduced iron (DRI) process for manufacture of sponge iron. Using the sponge iron so manufactured, bloom, billets and MS ingots were manufactured by the appellant in its factory. Main raw material for the manufacture of sponge iron was iron ore. 3 Investigation into the affairs of the appellant brought out that there was suppression of receipt of iron ore by it. Such quantity was found to be 276896.820 MT. Enquiry made with Railways of Bilaspur revealed that although the appellant industry had procured iron ore of 11,60,328.500 MT from out side during the period 2002-2003 to 30-01-2005 it recorded receipt thereof as 8,96,353.320 MT in Form-IV maintained under Central Excise Act, 1994, giving rise to difference of 2,76,896.820 MT of iron ore not recorded in the statutory record. Such differential quantity were alleged to have been used for clandestine manufacture of sponge iron and captive consumption thereof for manufacture of blooms, billets ingots which were also ultimately removed clandestinely evading excise duty to the extent herein before stated. 4 In the course of investigation there was discovery of ....
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....ional Superintendent of Central Excise Department on the same day. But while questioning Shri S.N. Jha, DGM (Excise) who was signatory to such report it came to light of investigation that the shut down and start up intimation was normally received from the plant on the subsequent date whereas the report was submitted on the same day to the Department. That showed that such reported shut downs were false. (g) The Daily kiln operating status report prepared for kiln No.1 & 2 contained shift-wise parameters, raw material status and other technical details and total production of sponge iron per day as well as total iron ore and coal used per day. Such report recovered in the course of investigation for some intervening period tallied with the production report of sponge iron appearing in the daily operation report of directly reduced iron plant recovered from SID for that period. The daily kiln operating status report substantiated the figures of daily operation report of the directly reduced iron plant which appeared to be the correct production report. But the Excise records did not reflect such position. (h) The CCR log book and shift record of sponge....
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....cuments like bills raised by the contractor for such cleaning which confirmed the shut down status as shown in the daily operation report maintained in direct reduced iron plant. But the shut down status appearing in the Excise records varied proving suppression of production. 5. Investigation brought out that while the production figures available in daily operation report of the DRI plant in SID were the actually manufactured figures of the unit and the figures appearing in the statutory records were lower than that, such unaccounting of difference was to evade excise duty intentionally. The yield percentage calculated basing on the figures of daily operation report of SID, consumption figures of iron ore and production of sponge iron therefrom during the period 2002 to 30-01-2005 (except for the period 16-11-2002 to 31-03-2003) was 62.26%. But the figures recorded in the Excise records gave rise to the yield of 58.12% demonstrating suppression of production. 6. Investigation also alleged that there were no cash sales of the iron ore. That was falsely claimed by the appellant manufacturer with a view of suppress production of sponge iron and ultimate....
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.... of above description. 8. Facts and figures gathered from Municipal Corporation, Nagpur, builty book register/cash memos recovered from the transporters namely-M/s Jay Amba goods carrier, M/s Shri Gurunanak Roadways and from M/s Lift & Shift, Raipur and parallel invoices recovered from M/s Sun Vijay Rolling & Engineering Ltd. Nagpur and M/s Sun Vijay Steel Pvt. Ltd., Nagpur during follow up investigation showed that blooms, billets and ingots were clandestinely removed and cleared to these buyers and others named in the show case notice as well as findings of Adjudicating Authority. 9. Investigation alleged that during the period 01.04.2002 to 30.01.2005 (except for the period 16.11.2002 to 31.03.2003) appellant (manufacturer) systematically suppressed production of sponge iron to the tune of 2,69,603 MT. This unaccounted production of sponge iron was captively consumed for the production of 2,35,336 MT of bloom, billets and ingots which was also suppressed and clandestinely cleared without payment of duty. 10. Analysis of the production trend of the appellant showed that it was showing abnormally short recovery of sponge iron and production of bloom, billets a....
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.... 9849.510 8671.508 18900/- 163891501/- 12% 19666980/- 393340/- Sept 04 10248.300 9022.603 18456/- 166521161/- 12% 19982539/- 399651/- Oct 04 8365.830 7365.276 18260/- 134489940/- 12% 16138793/- 322776/- Nov 04 19303.600 16994.889 17917 304497426/- 12% 36539691/- 730794/- Dec 04 18905.590 16644.481 17063/- 284004778/- 12% -34080574/- 681611/- 1.1.05 to 30.1.05 2307.000 2031.082 18035/- 36630563/- 12% 4395668/- 87913/- Total 92142.060 81121.866 166595019/- 2616085/- 13. 5007.290 MT of Sponge Iron found short in the factory of the appellant during Physical Verification conducted on 01.02.2003 were used captively for the unaccounted production of Blooms/Billets/Ingots and removed without payment of Central Excise Duty and Education Cess. Those were unaccounted without recording issue of Sponge Iron. Removal of Blooms/Billets/Ingots clandestinely manufactured did not find place in the Duty Stock Account, Form-IV, Daily Raw Material Report, RG-I and were cleared without issuing Invoices violating Rule 4,6,8,10,11 and 12 of the Central Excise Rule, 2002 as calculated below: SPONGE IRON FOUND SHORT (IN MT) 5007.290 CONVERSION OF SPONGE IR....
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....ure of blooms, billets and ingots were made. When the iron ore was sold at the Railway sliding and that remained unquestioned, there was no scope for Revenue to make allegation that unaccounted iron ore were used for manufacture of sponge iron. 18. Appellant further submitted that there was no investigation made to find that there were no sales of iron ore made at the railway sliding. Ld. Authority below acted suspiciously recording erroneous facts in para 41 of the re-adjudication order. There was no suppression of any kind established. The fact recorded in para 42 of the adjudication order is also baseless. Energy consumption figures were considered by learned Adjudicating Authority erroneously when power was also sold by the appellant partly. 19. It was also submitted by Appellant that actual use of the power in manufacture of sponge iron out of the total generation thereof was arbitrarily estimated by ld. Adjudicating Authority. Sponge iron was intermediate. Entire power generated were not used for manufacture only but were partly sold and also used for other purposes. Such aspect was ignored by the Authority below.&nb....
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....ity recorded at the plant, consumption thereof as well as output obtained therefrom. Excise record suppressed actual production of sponge iron, blooms, billets and ingots. Books of accounts were fabricated by appellant to show that the iron ore purchased were fully utilized and there was a lower production due to generation of fines. Such fictitious claim was made by appellant to encash the unaccounted goods which was demonstrated by various evidences recovered during investigation. 25. None of the evidence gathered by investigation at the time of investigation were rebutted by appellant. The report recovered from the kiln, sponge iron division and from various sources were not controverted. There were lower quantity of output recorded in Excise record compared to the actual input and electricity consumed. Cogent and credible evidence gathered by investigation proved questionable modus operandi of the appellant. There were shortage of stock found proving clandestine removal. Appellant operated with oblique motive to cause prejudice to Revenue. There was also premeditated design made by appellant to cause evasion systematically and scient....
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.... duty on the suppressed quantity. Secondly, learned authority below found that there was short of stock detected during physical inventory taken by investigation resulting in duty evasion of Rs. 94,59,415/- and education cess of Rs. 1,89,188/- aggregating Rs. 96,48,603/-. 32. The materials discovered in the course of investigation brought out questionable modus operandi of the appellant. Taking false plea of sale of part of the iron ore at the railway sliding and without any evidence of such sale, the sold quantity of iron ore were used to manufacture sponge iron and such sponge iron ultimately used in unaccounted manufacture of blooms, billets and ingots. Plethora of evidence gathered by investigation as set out at the outset reveals such modus operandi. The goods so manufactured were clandestinely removed resulting in duty loss of Rs. 16,92.11.104/-. 33. Investigation established that there were serious irregularities in the entries on records maintained at the plant site and excise wing of the appellant proving falsified recording of entries in the central excise records. Production figures appearing in the plant records did not tally with the statutory records....
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....hysical inventory is concerned, plea of the appellant that inventory was not taken properly failed to get appreciation in absence of cogent evidence to the contrary. Allegation of shortage of stock found remained unrebutted. Panchnama prepared in the presence of the appellant and witnesses exhibited the quantity found physically in the course of search. Non-existence of the stock at the time of physical verification resulted with extinction thereof without payment of duty of Rs. 96,48,603/-. Hon ble High Court of Madras in the case of Alagappa Cements v. CEGAT, Chennai 2010 (260) ELT 511 (Mad.) has held that goods not found in the course of physical inventory gives rise to the inference that the unfound stock was due to clandestine removal thereof. 39. The material fact, outcome of investigation, gravity of allegation and strength of evidence on record prima facie show that interest of revenue has been prejudiced by the appellant causing loss to it to the extent aforesaid. This calls for predeposit to work out an interim modality since balance of convenience tilts in favour of Revenue and without pre-deposit order; irreparable injury may be sustaine....
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....ry or shake a citizen s faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. We often wonder why in the case indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all be given to the manufacturer, dealer....