TaxTMI 
TaxTMI 
2017 (5) TMI 601
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.... Excise duty of Rs. 8,49,015/- was made on 337.176 MT of MS ingots alleged to have been manufactured from short found 1.433 Mt of Silicon manganese and cleared without payment of duty. (iv) Demand of Central Excise duty of Rs. 21,93,724/- on 843.866 MT of MS Ingots alleged to have been manufactured from unaccounted receipt of 929.740 MT of Sponge Iron and cleared without payment of duty. (v) Demand of Central Excise duty of Rs. 13,80,579/- on 470.588 MT of MS Ingots alleged to have been manufactured from 4.450 MT of Silico Manganese and cleared without payment of duty. (vi) Demand of Central Excise duty of Rs. 29,20,916/- on 1047.059 MT of MS Ingots alleged to have been manufactured from unaccounted receipt of 2 MT of Ferro Silicon and cleared without payment of duty. (vii) Demand of Central Excise duty of Rs. 7,87,047/- on 294.745 MT of MS Ingots clandestinely cleared in the guise of returned goods. (viii) Demand of Central Excise duty of Rs. 24,61,052/- on 934.730 MT of MS Ingots clandestinely cleared as ascertained from the transporter LR and sales tax enquiry. (ix) Demand of Central Excise duty of Rs. 3,00,188/- on 113.455 M....
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.... Again vide Order No. 47/CEX/2014/D dt. 14.10.2014 the demands were confirmed. Hence the present appeal. 5. The Ld. Counsel Shri R. Santhanam appearing on behalf of the appellants submits as under : 5.1 that the demands based upon power consumption are illegal as the same is based on non-existing report of Dr. N.K. Batra, Prof. IIT Kanpur and same cannot be basis to arrive at the actual power consumption of the Appellant's Factory. He submits the demand of duty has been worked out on the basis of imaginary electricity consumption as standard. It has been assumed that 1046 Units are required for production of one MT of MS Ingots. That by dividing the electricity consumption of factory from 1046, the imaginary figure of 27711.93 MT of production of Ms Ingots has been arrived and further assumption has been made that the goods were cleared clandestinely. That the demands are thus false and fictitious. The actual ascertainment of power consumption per MT was conducted by the revenue with the help of technical experts from MSEB by conducting test on 08.12.2005 and 12.12.2005 and the panchnamas were drawn. It was found that power consumption was 1773 Units per MT on 08.12.2005 ....
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....d from 80 MT of Sponge Iron to have been found short. No actual weighment was done and the shortages were arrived on eye estimation basis. The shortages were denied by their director Shri Vinod Agarwal during his cross examination, and even the panch witnesses also denied during their cross examination on 09.11.2010 that they witnessed any shortages. That the shortages of Sponge Iron and production of unaccounted production of MS ingots both are imaginary and hence are illegal. 5.4 The demand of Rs. 8,49,015/- is on alleged imaginary production of 337.176 MS Ingots assumed to be produced from the alleged shortages of 1.43 MT of Silico Maganese. The weighbridge measures quantity in multiples of 5 Kg and quantity below 5 Kg in fractions cannot be weighed. The Silicon Magnese of 1.43 Mt is only assumed figure and it is inconceivable how the shortages of 1.43 Mt of Silicon Maganese would result into unaccounted production of 337.176 MT of MS Ingots. 5.5 The demand of Rs. 21,93,724/- is on 843.866 MT of MS ingots assumed to have been produced and cleared out of factory on the basis of shortages of 929.470 MT of Sponge Iron. The quantity of Sponge Iron has been arrived at on the ba....
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....tion no unaccounted receipt of Sponge Iron is proved and therefore the demand on assumed manufacture of MS Ingots is illegal. 5.6 The demand of Rs. 13,80,579/- on 470.588 MT of MS Ingots has been made on the basis that 2 MT of Ferro Silicon was not accounted and the same has been used in unaccounted manufacture of MS Ingots. The demand is false and fictitious as during the course of search on 05.01.2006 the letters related to the claim of Rs. 13,000/- by the supplier of Ferro Silicon (Off Garde) was taken and the correspondence also revealed that the same was sub standard and hence it was rejected and returned to the supplier. Therefore neither the Silicon was taken into record nor used for production and hence could not have been used. That Ferro Silicon is used to quench the fire and reduce the flames in process of manufacture of ingots in the furnace and it does not in any manner add to the weight of MS ingots. It can never be said that by use of Ferro Silicon production of Ms Ingots of 470.588 MT were produced. 5.7 The demand of Rs. 29,20,916/- is on assumed production of 1047.059 MT of MS Ingots and has been calculated on the assumption of 4.450 MT of Silicon manganese h....
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....rt of consignment is returned. In some cases the supply is short by few kgs. due to weighment of ingots and the order received not being in round/ matching figures. In the case of goods ordered by the broker the commission is paid on full quantity order and no space for returned/ rejected goods is given which has resulted into difference in quantity. He submits that even otherwise there has been no investigation from the recipients of the goods and no further enquiry made from the parties whose name appear as buyers. In such case no demand can be made. 5.10. He submits that the demand is thus without any basis as not a single alleged buyer of the goods has been identified and there is no evidence of such clearances. He has relied upon following judgments : CCE Vs. Brims Products 2011 (271) ELT 184 (Pat), UOI Vs. MSS Foods Ltd. 2011 (264) ELT 165 (MP), CCE Vs. Vishwa Traders (2013) 287 ELT 243 (GUJ), Mahavir Polyplast Pvt Ltd. Vs. CCE (2013) 287 ELT 139 (TRI), CCE Vs. Silverstone Papers Ltd. (2013) 287 ELT 478 (TRI), Kothari Pouches Vs. CCE (2001) 135 ELT 531 (TRI DEL), Kuber Tobacco Products Ltd. Vs. CCE (2013) 290 ELT 545 (TRI), Pan Parag (I) Ltd. Vs. CCE (2013) 291 EL....
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....ely on the ground that the same is not supported by any statistical figure. We find that the demands confirmed on the basis of electric consumption cannot be confirmed without considering the submission of the Appellants. The revenue has not considered the electric consumption for setting up of the Unit and rolling mill as well as electricity consumed in ancilliary uses. However no such exercise was undertaken which itself discard the claim of the revenue. The demand of clandestine removal of goods cannot be raised on the basis of power consumption in absence of any positive evidence of clandestine production and removal. We find that much water has flown over the years on the demands raised against the assessees on the basis of report of IIT, Kanpur. It has been consistent view of the Tribunals and High Court that such a demand cannot be sustained. The consumption of electricity depends upon various factors such as nature of material, type of furnace, power supply, labour and conditions for running the plant. Thus we find that only on the basis of power consumption no demand could have been upheld. In identical facts and cases the Hon'ble High Court in the case of CCE Vs. R.A. Cas....
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....tal thereof in the statutory records, manufacture of finished goods, labour employed and payment made to them, packing material used, records of security offices, discrepancy in the stock of raw materials and final products and clandestine removal with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, transporters documents, such as L.Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees, amount received from the buyers and there statements. Whereas in the instant case not a single of such evidences was found. Even the department has not taken any step to investigate any such incidence for the very simple reason that nothing of that nature of evidence available. We therefore do not find any reason to deviate from the ratio of aforesaid judgments and hold that the demand based upon the electricity consumption is not sustainable and hence set aside. 6.1 As regard other demands we find that the demand of Rs. 30,131/- is based on shortage of Ms Ingots. We find from the records that the shortages were arrived without conducting physical ver....
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.... panch witness in their cross examination refused the shortages of sponge iron. In such view of facts and our above observation we hold that the duty demand of Rs. 1,82,888/- and of Rs. 8,49,015/- is not sustainable and is required to be set aside. 6.3 We find that other raw material are alleged to have been received unaccounted and separate duties has been demanded on MS Ingots in respect of each of such raw material assuming that the same were used in manufacture of clandestinely cleared MS Ingots. It is alleged that 2.00 MT of Ferro Silicon was not accounted for in the records and have been used in manufacture of 470.588 MT of MS Ingots valued at Rs. 84,59,433/- involving duty of Rs. 13,80,579/- which were cleared without payment of duty and hence duty is demanded. Similarly it is alleged that the Appellant have not shown consumption of 4.00 MT Silicon Manganese in their records and the resultant goods i.e 1047.059 MT of MS ingots manufactured, from such quantity of Silicon Manganese, was cleared without payment of duty amounting to Rs. 29,20,916/-. Further it is alleged that the Appellant company have received 929.470 MT of Sponge Iron in unaccounted manner and the same has ....
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.....745 MT of MS ingots has been made alleging that the goods were removed under the guise of duty paid rejected goods. The Appellant had pleaded that the goods were entered in records and were cleared on payment of duty. The department has raised the demand contending that the Appellant has not intimated the receipt of goods to the department. In this context we find that in terms of Rule 16 (1) and (2) the assessee is entitled to avail credit on return of duty paid goods and in case the same are returned as such without undertaking any process of manufacture, the duty equal to cenvat credit availed has to be discharged. We do not find any violation of rules and therefore the credit is available. Further we find that no investigation was undertaken from the parties from whom these goods were received to ascertain the actual position or any other evidence to show that the assessee has manipulated the records. No evidence is forthcoming on record which can show that the returned goods were not received in the Appellant factory. Once it is shown that the returned goods were brought into the factory, the cenvat credit of such goods is available to the assessee. Therefore in absence of an....