TaxTMI 
TaxTMI 
2017 (11) TMI 1261
X X X X Extracts X X X X
X X X X Extracts X X X X
....lty of equal amount against the notice. A personal penalty of Rs. 1,50 crore has also been imposed upon Shri Sanjay Agarwal, Director. 2. Briefly stated the facts of the case are that M/s. Dadu Steel and Power Ltd. are engaged in the manufacture of M.S. Ingots falling under chapter heading 72061010 of Central Excise Tariff Act, 1985. During the course of audit of the books of accounts of the appellant's unit for the period October 2007 to March, 2009, it was observed that average consumption of electricity towards production of finished goods i.e. M.S. Ingots showed abnormal variation in each month. Normally, for the manufacture of MS ingots in an induction furnace with raw materials like sponge iron, pig iron and waste and scrap aroun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dit report for the year 2008-09). Upon inquiry with Multi Commodity Exchange of India Ltd., Mumbai, it was reported by AVP (Legal) of MCX vide his letter No.MCX/Legal/SJ/BW3247/09-lO dated 27.7.2009 that "there is no such client, M/s. Dadu Steel & Power Ltd. registered as a client with the member M/s. Trinetara Commodities." They have shown sale of slag to the tune of Rs. 25,21,595/- and Rs. 21,23,149/- in their profit and loss account during the year 2007-08 and 2008-09 respectively. The Revenue has alleged that due to excess electricity consumption as indicated above, they have produced extra quantity of MS ingots which were cleared without payment of duty amounting to Rs. 8,15,89,512/- clandestinely. 6. Accordingly, Show cause notice wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 108) SC]. He prayed that the duty demand may be set aside. 9. Learned DR on the other hand, contested the submissions of appellants and reiterated the findings of the Order-in-Original. Learned DR also filed written submissions dated 24.7.2017 in which it has been submitted that in addition to consumption of electricity, the department has also produced other evidence in the form of additional moulds procured by the appellant which were not found physically available in the factory. The appellant has been found to have recorded sale of bogus sale of slag during the period 2007-2008 and 2008-2009 to cover up the receipt of sales proceeds of clandestine cleared goods. Revenue has also found that huge amount has been shown as profit earned f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lant's factory. They have also highlighted factors such as the following which can have impact on electricity consumption. (1) It is stated that power consumption depends upon supply of power to the furnace and the different types of raw material which is used. (2) If there is power break down then the entire production gets stopped. Further, if it is for 5 to 6 hours, furnace is required to be restarted. (3) In the case of break down of other machinery, the factory cannot sustain production. (4) The skill of labour / employee is also a factor. In the light of above factors, they have submitted that allegations of clandestine clearance cannot be held against them only on the basis of Technical Opinion report. They also relied upon ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellants contention is that even if it is presumed that transactions are not as certified by MCX, it cannot be presumed that the appellants had manufactured and removed ingots clandestinely. c) The appellant has intimated receipt of huge amount of receipts of the order of Rs. 25 lakh and Rs. 21 lakh during the period 2007-08 and 2008-09 by slag. It has been alleged that the amount shown as earned is nothing but accountal of proceeds of clandestinely cleared goods. The appellant has contended that the department itself has, during separate proceedings, issued show cause notice to pay the duty under Rule 6(3) of the Cenvat Credit rules, 2004. No finding has been given by the adjudicating authority on this. 13. The main cause raised by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f alleged clandestine removal, the onus is on the Revenue to prove what it alleges with positive and concrete evidence. In the absence of any positive evidence brought by the Revenue to discharge its onus, the impugned order cannot be sustained." 15. The above case law settles the position that electricity consumption cannot be the only factor for determining the duty liability that too on imaginary basis without having tenable evidence of clandestine manufacture and clearance of goods. The excess consumption of electricity, no doubt raises suspicion with regard to quantum of action. However, mere suspicion cannot lead to demand Electricity consumption can vary from one unit to another and can vary in the same unit in different conditions.....