TaxTMI 
TaxTMI 
2017 (2) TMI 194
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....1996-97, the appellant had completed the first phase of 17000 MTs capacity foundry. In the 34^th Annual Report for the year 1997-98 they had claimed to have developed and got approval of samples of more than 20 products. The said annual report also shown that the appellant had purchased raw materials worth Rs. 25.17 lakhs. The commercial production was started by the appellant w.e.f. 01/10/1998 and all expenses incurred till then were treated as preoperative expenses. For the period January to March 98, the appellant had reported production worth of Rs. 1,84,215/- and paid duty of Rs. 27,634/-. The appellant had shown NIL raw material consumption in their 34th annual Report for the year 1997-98. 2. A statement of Shri D.B. Ghate, Quality....
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....sed and from October 97 to March 98 electricity worth Rs. 30,52,778/- was consumed. 4. Statement of Shri S.B. Gokhale, Production Manager of the appellant company was recorded. He informed that he started working in the said plant from October 97 as Manager Production. He confirmed that the furnace was fully commissioned and fired in October 97. He confirmed that he supervised all the trial run productions. He also confirmed that the raw materials charging to the furnace was varied from 1 to 2 tons per heat depending upon the production planning and requirement of the customers. He also confirmed that during October 97 to December 98 only one furnace in the plant having capacity of 2 tons per hour was operational. He also confirmed that ....
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.... Ltd. addressed to the appellant giving delivery schedule of castings for each month from December 98 to May 98. Fax message dated 31/03/98 sent by the appellant to ZF Steering Gears Ltd. shown delivery of castings by the appellant to ZF Steering Gears Ltd., on 18/03/98. However, there was no corresponding Central Excise invoice for the said delivery. Letter dated 21/11/97 ZF Steering Gears Ltd. addressed to the appellants refers to receipt of castings in oiled condition and the request of ZF Steering Gears to supply the material in red primer coated condition free from oil. 6. All other correspondence indicated that the appellant had started clearing castings prior to January 98 and were not recording the said production in their record....
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....es with the cost as can be worked by cost : power ratio i.e. Rs. 104.17 lakhs. It, therefore, justifies that M/s.DGP during 6 months i.e. from October 1997 to March 1998 of the Finance year 1997-98, manufactured various types of castings having minimum consolidate cost of Rs. 104.17 lakhs." On the basis of this cost, the assessable value of the castings manufactured by the appellant was determined by adding 15%. After adjusting the duty already paid by the appellant in the clearance recorded by the appellant, the balance was demanded. 8. In the order-in-original, the charge of clandestine clearance was upheld. The order-in-original discards the power consumption as the base for calculation of quantity produced on the grounds that at t....
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....8. The order-in-original, instead of adopting the electricity consumption per unit production for the year 1998-99 uses the ratio of raw materials consumed per unit production on finished goods of the year 1998-99 as alleged in notice, to arrive at the production of the year 1997-98. Accordingly, the revised production arrived at by the adjudicating authority works out to Rs. 1,15,30,580/-, after granting the cum duty benefit, the assessable value is arrived at Rs. 98,00,993/- and duty of Rs. 12,50,756/- was demanded after adjusting the duty of Rs. 27,634/- already paid. Equivalent penalty was also imposed under Section 11AC. A penalty of Rs. 50,000/- was also imposed under Rule 25 of the Central Excise Rules. The appellant challenged the s....
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....urther argued that closing balance of raw materials in the balance sheet was also discarded on the basis of the statements. He argued that since the balance sheet recorded the closing balance of raw materials which is different from Rs. 22,000/- recorded in the order-in-original. He further argued that no inference of excess production and clearance of goods can be drawn on the basis of communication between the appellants and ZF Steering Gears Ltd. in absence of any other corroborative evidence. 11. Learned AR relies on the impugned order. 12. We have gone through the rival submissions. 13. We find that the entire basis for qualification of the goods produced by the appellants has changed. In the show-cause notice, the qualificati....