TaxTMI 
TaxTMI 
2016 (11) TMI 1347
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....they are manufacturing M.S. Ingot since long. ● Show cause notice dated 01.08.2014 was given by the Commissioner, Central Excise and Service Tax, Ranchi for the period running from June,2009 to March-2014. ● First date of hearing was on 25.03.2015 i.e. after approximately 7 months and 25 days. Petitioner could not remain present because of illness of mother of petitioner no. 2, who is a Director of Petitioner no. 1. ● On 22.09.2015, petitioner could not appear before respondent no. 2 since the letter dated 16.09.2015 was received by the petitioner on 22.09.2015 at 2.30 p. m. ● On 21.12.2015, the hearing was fixed. This petitioner appeared and filed a letter requesting that documents upon which the reliance is placed in the show cause notice may be supplied to the petitioner. Few of the documents though are relied upon by the respondents in the show cause notice like Nucleus Group report and All India Induction Furnace Association report which were referred in the show cause notice and though they were demanded by this petitioner, the same were not supplied. ● On 13.01.2016, petitioner again requested to supp....
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..... Batra's report has been referred every now and then, since 2003 onwards, by the respondents and there are no less than one dozen judgments in which it has been observed right from the learned Tribunal to the Hon'ble Supreme Court of India that electricity consumption per se cannot be relied upon by the respondents for proving clandestine removal of final product, because there is no set pattern for consumption of electricity. There are several reports given by more reliable institutions and persons than Dr. N.K. Batra, which have been referred in the aforesaid decisions of R.A. Castings. Cross examination of Dr. N.K. Batra is also not made available, despite the request was made. The respondents ought to have carried out experiment of consumption pattern of electricity at the factory premises of the noticee, which has been referred to paragraph no. 22 of the decisions of R.A. Castings Private Ltd, which has not been gone into by the respondents. The whole show cause notice is based upon presumptions and surmises. The burden of proof lies upon the respondents that there is clandestine removal of finished product, which has not been discharged, at all, by the respondents. ....
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....it is submitted by the counsel for the petitioners that electricity consumption pattern, is useless argument, on behalf of the respondents. Every now and then, such argument has been canvassed, in the Order-in-Original and the first adjudicating authority has dropped the baseless notice and whenever the first authority has confirmed such ground, the tribunals have passed the Orders and quashed such ground, like in the case of R.A. Castings Pvt. Ltd Vs. CCE, which is approved by the Allahabad High Court and SLP has been dismissed by the Hon'ble Supreme Court. It is further submitted that whenever Order-in-Original are passed as stated herein above, dropping the show cause notice, the same are placed before the committee, consisting of two chief commissioners and they are taking decisions, whether to prefer any further appeal or not and all aforesaid cases where the show cause notice has been dropped and the ground of the electricity consumption pattern has also not been approved, in the Order-in-Original, no appeal has been preferred by the department. Thus, it has become fashion with the respondent that arbitrarily in few cases, ground of Dr. N.K. Batra will be raised for few i....
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....Original and hence, this Court may not entertain this writ petition. ● It is further submitted by counsel for the respondents that time and again opportunity of being heard was given to the petitioners, approximately for more than half dozen times, but, the petitioners had not filed any reply. Counsel for the respondents submitted that Annexure-16, which is a preliminary defence, was never given during the course of hearing before the Commissioner, Central Excise and Service Tax, Ranchi, but, it was given in the common centre of the Central Excise and Service Tax Office of the Commissioner. Whenever any matter is being conducted by the adjudicating authority, the reply should have been tendered before the adjudicating authority and hence, it has been observed in paragraph no. 20 of the Order- in-Original that noticee has not given any reply. Hence this Court may not interfere with the orders passed by the Commissioner, Central Excise and Service Tax dated 22.03.2016. REASONS 5. Having heard counsels for both the sides and looking to the facts and circumstances of the case, we, hereby, quash and set aside the Order-in-Original dated 22.03.2016 (Annexure-14 to th....
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....ts. It has become fashion with the respondents-department to rely upon a document, since 2003 onwards, which is known as report given by Dr. N.K. Batra, so-called Professor of IIT, Kanpur. When IIT, Kanpur is inquired by these petitioners whether such report has ever been given by IIT, Kanpur, the answer given by IIT, Kanpur in negative (Annexure-5 to the memo of the petition). v. Right from 2003 onwards, in not a single matter decided by the Commissioner or by the Tribunal or by any adjudicating authority, the department has produced Dr. N.K. Batra for cross examination by any assessee in whole of India. Nobody knows the authenticity of Dr. N.K. Batra's report. Nobody is error proof authority much less Dr. N.K. Batra. Hence, his cross examination is must. His report is not a conclusive piece of evidence as per Indian Evidence Act, 1972. vi. Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable.The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive pr....
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....e removal, but, for proving the clandestine removal, the substantive piece of evidence is must. Few such evidences have been referred by this Court. The list of these evidences is not exhaustive:- (i) The department should have collected the proof of amount received from the consignees, statement of consignees, receipts of sale proceeds by the consignor and its disposal. vii As no adequate opportunity of being heard has been given to the petitioner, there is violation of principles of natural justice, hence, this writ petition is entertained at this stage. It has been held by Hon'ble Supreme Court in the case of 'Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors', reported in (1998) 8 SCC 1, in paragraph no. 14 and 15, which reads as under:- "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of th....
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....he respondents, henceforth not to use Dr. N.K. Batra report against any noticee especially when the department is levelling allegations of clandestine removal of finished products, unless, the experiment of consumption of electricity is carried out at the factory premises of the very same assessee/noticee. The consumption of the electricity depends upon the efficiency of the machines also. It also depends upon the fact whether the noticee is utilizing obsolete machinery or modern machinery. Dr. N.K. Batra might have carried out experiment in a factory where there may be efficient machinery, whereas machines used by the noticee may not have the same efficiency. Therefore, cross examination of Dr. N.K. Batra is must. Department can use the report of Dr. N.K. Batra's as the guidelines and nothing beyond that. Department has to bring its own experts at the factory premises of the noticee. Department must carry out an experiment of the consumption of the electricity at the manufacturing place of the noticee either for 1 MT or for 1000 unit etc. so that, the electricity consumption pattern can be measured for the very same machinery and thereafter it can be compared with the quantity....
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....s. High consumption of electricity by itself cannot be the ground to infer that the factories were engaged in suppression of production of steel ingots. The reasons for high consumption of electricity in the case of the appellants' factories have not at all been studied and analysed by the Revenue independently. Instead, the norm of 1046 units fixed as per Dr. Batra's report has been blindly applied to the appellants' cases to work out the excess production. This approach is flawed and does not have sanctity. 21. The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. Therefore, there can be no generalization nor any uniform norm of 1046 units as so....
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....entral Excise, Chennai-II reported in 2005 (182) E.L.T. 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 onus is on the Revenue to prove what is alleges with positive and concrete evide....
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....lly manufactured M.S. Ingots in excess of what has been recorded in their statutory records and removed the said quantity clandestinely from their factory without payment of duty. The excess production has been worked out on the basis of electricity consumption for which the standard norms are imported from report of late Mr. N.K. Batra, Professor of Material and Metallurgical Engineers, IIT Kanpur. 20. We find that the following reports have been referred to either by the appellants or the Revenue laying down the norms for the consumption of electricity for the manufacture of one MT of steel ingots: (i) 555 to 1046 (KWH/T) as per Dr. Batra's report; (ii) 1800 KWH/T as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India; (iii) 1427 KWH/T as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv) 650 units to 820 units/MT as per 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.L.T. 1147". (emphasis supplied) In view of the aforesaid elec....
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....ther arbitrariness in the Order-in-Original about the lower remuneration to the employees of the petitioner no. 1 as well as the manufacturing unit is running in loss and the profit is made from non-core activities etc. There appears to be very high sounding reasons, but, if they are viewed with zoom lens camera, it appears that nothing is proved by the respondents. "Low remuneration" is a relative word and therefore, statement of the employees of the noticee, ought to have been reduced to writing by the respondents- department. If the employees are stating that they are getting more remuneration than what is shown in the books of account by the noticee, then these statements ought to have been reduced in writing and they must be referred in the show cause notice. Copies of the gist of the statements should be given to the noticee and those employees must be kept ready for cross examination. This type of procedure ought to have been followed by the respondents- department. Instead of doing this exercise, allegation has been levelled that there is low remuneration paid by the noticee, is not sufficient at all. 7. The Order-in-Original is based upon mere presumptions and possibili....