TaxTMI 
TaxTMI 
2016 (9) TMI 1176
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....ral Excise Tariff Act, 1985. That the said goods are manufactured in smelting furnaces by smelting oxides into alloys at very high temperatures. That each furnace has a tap hole and molten alloys and slag are tapped out at periodical intervals and after cooling the cast alloy is removed, chipped, cleaned and separated from sand, slag and other contaminants. That manufacturing process is completed after such clearing but the cast alloy segregated from contaminants is yet to be broken into pieces, sorted and graded according to size etc. That this stage of ferro Alloys is referred to as unsorted production and is not ready for entering in the Daily Stock Account (DSA) or RG-1 account but are duly reflected in Appellant s production records. That unsorted production of Ferro Alloys after breaking into smaller pieces, sorting and grading according to size and chemical analysis are packed in gunny/HDPE bags of 50 kg. each or are stacked in loose form as heaps for loading onto containers for exports or trucks for steel plants. That the ferro-alloys obtained in the form of powder/dust during breaking and sorting are bagged. That as per their practice bagged quantity is entered into DSA on....
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....d show cause notice dated 05.05.2009 which has been confirmed by Adjudicating authority under impugned Order-in-Original dated 13.10.2010 by confirming demand of Rs. 1,41,37,531/-, along with interest and also imposing a penalty of Rs. 1,41,37,531/- upon the Appellant and Rs. 10.00 Lakh on the Director. 3. Learned Senior Advocate for the Appellants submitted that due to following arguments the case of clandestine manufacture and clearances is not established against his client at all :- (i) That stock-taking exercises done by both the Income Tax authorities and the Central Excise authorities are completely hypothetical. That method of stock-taking done by the Income Tax authorities is not disclosed to the Appellant and no income addition has been made by the Income Tax authorities on this issue in the relevant assessment year. That while estimating weight Income Tax officers have considered unsorted material also which has not reached DSA stage. (ii) That shortage has been calculated by starting from the Income Tax inventory dated 21.09.2007 and to that DSA figures from 20.09.2007 to December 5, 2007 have been added as per the show cause notice. That Income Tax inventory w....
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....i.-Mumbai)] (v) Durga Trading Company v. Commr. of C.Ex., Lucknow [2002 (148) ELT 967 (Tri.-Del.)] Upheld by Supreme Court [2003 (157) ELT A 315 (SC)] (vi) Satpushp Steels (P) Ltd. v. Commr. C.Ex., Jaipur [2006 (196) ELT 105 (Tri.-Del.)] 4. Shri S.K.Naskar, AC(AR) appearing on behalf of the Revenue argued that Appellant was also recording weight of the sorted material based on 20 kgs. and 30 kgs. capacity buckets and cannot now object to the method of weight determination and adopted by the officers of Central Excise. That stock calculation done by the Income Tax authority has not been contested by the Appellants. That shortages worked out by DGCEI authorities were not properly explained by the Appellants and their employees when they were present at the time of physical stock verification. That as per para 22.0 (d) of the Order-in-Original dated 13.10.2010 no physical weighment was undertaken while recording the production figures in DSA and that such recording was done on estimation basis, for which statement dated 27.01.2009 of Shri Hemanta Bhattacharjee was relied who is Appellant s Accounts Manager. That Shri Hemanta Bhattacharjee in answer to Question No.....
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....the heap/heaps. It is observed from letter date dated 14.09.2010, given by the Appellant to the Adjudicating authority, that three photographs were, inter alia, provided to department, which indicate that heaps/stack of ferro alloys are irregular geometrical shapes and are heterogenous so far as size of material is concerned. Appellant also produced an expert opinion of one Valuer Chartered Engineer dated 13.09.2010 to the Adjudicating authority indicating that weight of stocks of Silico Manganese and Ferro Manganese cannot be accurately determined by weight-volume ratio. This certificate was furnished by the Appellant as a result of personal hearing given by the Adjudicating authority on 10.09.2010. This point was also taken up by the Adjudicating authority in para-10 of the Order-in-Original dated 13.10.2010 but no findings were given by him as to why the version given by the Appellant and endorsed by an expert, cannot be accepted. In the absence of any documentary evidence or expert opinion obtained by department a view expressed by an expert Chartered Engineer cannot be brushed aside. Adjudicating authority or agency issuing show cause notice could have asked for cross-examinat....
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....cements cited by the appellants. There is no allegation that the appellants have removed goods in clandestine manner. Moreover, the stock taking was done by the appellants themselves. The departmental officers only associated with the same. Hence, the stock taking cannot be said to have been conducted in terms of Rule 223A of the C.E. Rules. In any case, the shortage arrived at is based on estimates. The estimate cannot be said to be very accurate, as it has got its own limitations. It should also be appreciated that there are practical problems in steel plants in the matter of accounting of their production. The CBEC Circular No. 52/79 Cx.6, dated 26-10-1979 has also laid down certain guidelines with regard to condonation of losses observed during annual stock taking. The appellants submission that the excess/shortage noticed was only marginal should have been given its due consideration. The Tribunal in the case of M/s. Micro Forge (I) Pvt. Ltd. v. CCE, Rajkot reported in 2004 (169) E.L.T. 251 (T) has held that when the stock position is arrived at on the basis of estimation, the allegation of shortage of stock and consequent illicit removal of finished goods cannot be sustained.....
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...., excess consumption of power etc. In the case of Durga Trading Company v. Commissioner of Central Excise, Lucknow [2002 (148) ELT 967 (Tri.-Del.)], relied upon by Appellant, following was held in para 9:- "9. It is well? settled that the charge of clandestine manufacture of the dutiable goods and removal thereof without discharging the duty liable by an assessee, cannot be established on assumptions and presumptions. Such a charge has to be based on concrete and tangible evidence. In this context, reference may be made to Oudh Sugar Mills Ltd. v. Union of India - 1978 (2) E.L.T. (J 172) (S.C.), wherein the Apex Court has observed that demand of duty cannot be raised on the strength of assumptions and presumptions. There should be sufficient evidence of the removal of the goods alleged to have been manufactured and cleared without payment of duty. The charge of clandestine removal must be based on tangible evidence and not on inferences involving unwarranted assumptions. This very principle of law had been applied by the Tribunal in a number of cases and out of those, few are, Amba Cement and Chemicals v. CCE - 2000 (115) E.L.T. 502 (Tribunal) = 2000 (90) ECR 265, Gurpreet....