TaxTMI 
TaxTMI 
2016 (1) TMI 560
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....gots, Preventive Officers of the Commissionerate paid a visit to the factory premises of the main appellant. During the visit, the stocks were verified and it was found that there was a shortage of raw materials and excess of finished goods. The excess stock was seized and investigation was continued and statements of Manager, various signatories and Directors were recorded. On completion of investigation, they noticed that appellant had not recorded the production in their factory premises and clandestinely removed the goods. To come to such conclusion they relied upon the electricity consumption and the statements of various transporters. Show-cause notices were issued to the main appellant and the Director to show cause as to why the duty calculated as per the show-cause notices are not demanded with interest and penalty be not imposed on them. All the appellants contested the show-cause notices on merits as well as on limitation. The adjudicating authority after following the principles of natural justice, did not agree with the contentions raised by the appellants, confirmed the demand of duty with interest and imposed penalties on all the appellants. 4. Learned Counsel appea....
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.... of the assessee. Same view has been expressed by the order of this Tribunal in the case of Pragati Steels Pvt. Ltd. - 2012 (28 253 (Tri.). It is his further submission that majority order in the case of S.R.J. Preeti Steels Pvt Ltd. which was decided on 12.04.2012 by this Bench has analysed all the earlier decisions on the issue and following the judgement of the R.A. Casting (supra) rejected the Revenue's plea and allowed the appeals of the assessee. It is his submission that the issue is no more res integra. 4.3 It is his further submission that there was an addendum to the show-cause notice stating therein that an investigation was carried out in the factory premises of Shree Sidhbali Ispat Ltd., it was noticed that the appellant herein was receiving sponge iron clandestinely cleared from their factory and hence there is a receipt of un-accounted raw material. He would submit that when the authorities questioned the appellants Director and others, they categorically stated that they have not received any raw materials, specifically sponge iron, from M/s.Shree Sidhbali Ispat Ltd. without any documents. It is his further submission that the statement of Shri Chatar Singh, who i....
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....of Shri Chatar Singh. It is his submission that the allegation which has been upheld by the adjudicating authority that this amount is relatable to the clandestine sales of the goods is incorrect as the details were not verified by the Revenue and Revenue cannot draw adverse inference against appellant herein even if it is improperly explained as has been held by the judgement in the case of A.R. Castings (supra). It is his submission that the appellant also relies upon the unreported judgement of the Tribunal in the case of Charu Steels Ltd. & Others vs. CCE by final Order No.530910-53915/2014-EX(BR), Savitri Concast Ltd. & Anr. V.CCE vide Final Order No. A/51402-51403/2015-EX(DB) dt 23.04.2015 and R M Brothers Pvt. Ltd. & Ors v. CCE vide final order No. A/50905-50910/2015-EX(DB) dt. 19.3.2015 for the proposition that in these three judgements, orders issued was identical as is in these cases. 4.4 On limitation it is his submission that the show-cause notice dated 11.09.2009 is for the period 24.03.2005 to 18.06.2008 is clearly time barred as the main appellant was regularly filing the returns with the lower authorities during the relevant period. 5. Learned Commissioner (A.R.) ....
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....upplying sponge iron, one of the raw material of the main appellant without recording in any form and without payment of duty. It is his submission that the main appellant has not brought forth any evidence to disclaim to such statement of M/s. Shree Sidhbali Ispat Ltd. It is his submission that as regards the indirect income of Rs. 91,24,680/- which shown on account of "Hiring Charges" no explanation was forthcoming and no reply to show-cause notice which was indicated that the amount is an income from the hiring of trucks owned in an individual capacity by each of their Directors, it stands to reason that the individual income of Directors of a Private Ltd. Company cannot be shown as income of the Company and no evidence is produced that the main appellant is in the business of hiring of trucks nor there is any evidence which indicates that the trucks were registered in the name of the main appellant. It is his further submission that during the visit of the factory premises of the main appellant there was shortage of raw material and unaccounted finished goods which also indicates that the main appellant habitually clandestinely manufactures goods and clears the same without pay....
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....s and Rs. 1.54 crores confirmed against the appellant along with interest and equivalent penalties on all the four appellants is sustainable or otherwise in the facts and circumstances of this case. In both the impugned orders the adjudicating authority have mainly relied upon the production figures calculated on the basis of consumption of electricity @ 1046 units per metric tonne as per the report of Dr. N.K. Batra, IIT Kanpur. The adjudicating authority in impugned order dated 18.05.2010 has also recorded some findings as to the shortage of finished goods and raw material and receipt of unaccounted income of Rs. 91,24,680/- non accountal of actual production of Runners and Risers. Both the adjudicating authorities have relied upon heavily and only on the report purportedly given by Dr. N.K. Batra who held that for manufacturing of one metric tonne of M.S.Ingots, required electricity is 1046 units and have justified the same stating that the consumption of electricity by the main appellant indicated that they have not recorded the manufacturing and clearance of the finished goods. We do not agree with the contentions of the learned D.R. and the findings recorded by the adjudicati....
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....ts 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." 7.2 It is to be noted that Revenue aggrieved by such an order took up the matter before the Hon'ble High Court of Allahabad and the Lordships dismissed the appeals by a speaking order, which is upheld by the Apex Court by dismissing the SLP filed by Revenue. This judgement has been relied upon by this Tribunal in various cases and also in the case of S.R.J Preeti Steels Pvt. Ltd. which is a majority order wherein {one of us, M.V. Ravindran, Member (Judicial)} was a 3rd Member. The final order No. A-544-569/14/EB/C-II records that the reliance placed on the non-existent report of Prof. N.K. Batra, IIT Kanpur cannot be considered gospel truth and demands cannot be raised holding that there was clandestine manufacture and removal of goods i.e. M.S. Ingots. The said decision has gone into all the aspects which have been agitated before this Bench and held that there cannot be any demand on the assessee based only on the presumption of manufacturing and excess consumpt....
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....e Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite and without accounting them used for the manufacture of Frit for clandestine removal. There is also nothing on record nor there is any statement of the suppliers of other raw materials, which would indicate that the appellant had received unaccounted raw material from the suppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not ....
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....n in the factory of production; etc." On applying the ratio of the judgements of High Courts, we find, in the case in hand there is no tangible evidence of clandestine manufacture and clearances and the confirmation for the demand of duty is merely on assumption and presumptions and is unsustainable. 7.4 As regards the demands confirmed by the adjudicating authority in respect of shortage of goods, learned Counsel fairly submits that they are not contesting the issue but submits that penalty imposed be set aside. 7.5 Since the appellants are not seriously contesting the confirmation of demand raised in respect of shortage of goods during the visit of Investigating authorities, we uphold the demands along with interest and also hold that the appellants are liable to be penalised and we uphold the impugned order to that extent. 7.6 In respect of unexplained indirect income shown by the main appellant in the balance sheet for an amount of Rs. 91,34,870/- we find that the said income may be indicated in the balance sheet and the explanation given by the Directors of the appellant being short of any reasoning, given by itself cannot be considered as an amount which is received by....