TaxTMI 
TaxTMI 
2017 (11) TMI 1770
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....09.2014 (Annexure-11), passed by the learned Customs, Excise and Service Tax Appellate Tribunal, East Regional Bench, Kolkata whereby and where under the Appeal filed by the petitioner has been dismissed. However, the petitioner had filed Interlocutory Application primarily confining its prayer by challenging the Order-in-Original dated 30.03.2010 which was issued by the Commissioner, Central Excise, and Jamshedpur on 09.04.2010, which is at Annexure-2 of the writ petition, mainly on the ground that the show cause notice and Order-in-Original has been passed on presumption and surmises. As per the petitioner, highest case of the department is that there is some possibilities of clandestine removal of the M.S. Ingots, which is a final product of this petitioner. 5. Factual Matrix: • This writ petitioner is manufacturing M.S. Ingots since long. • Show cause notices dated 30.07.2008, 04.02.2009, 18/19.11.2009 were given by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur for the period running from for the period running from July, 2007 to December, 2007, from January, 2008 to November, 2008 and for the period December 2008 to July, ....
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.... 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. 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 in 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 notices is based upon presumptions and surmises. The burden of proof lies upon the respondents that there is a clandestine removal of finished product, which has not been discharged, at all, by the respondents. • It is also submitted by the counsel for the petitioner that the respondents are surprised about the loss sustained by the petitioner. Merely because there is a loss to this petitioner, that does not mean that there is a clandestine removal. • Counsel appearing for the petitioner has r....
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....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 industries and for rest of the industries, no such ground is ever raised. Because of this N.K. Batra's report, several petitions have been filed and several decisions have to be given by the Courts. • Counsel for the petitioner has submitted that in fact, the respondents could not prove the clandestine removal of the finished products viz. M.S. Ingots and hence show-cause notices dated 30.07.2008, 04.02.2009, 18/19.11.2009 as well as Order-in-Original dated 30.03.2010/09.04.2010 which are at Annexure-1 Series and Annexure-2, respectively, may kindly be quashed and set aside. 7. Arguments canvassed by the counsel for the respondents: • Counsel for the respondents submitted that the petitioner is having efficacious and alternative remedy against the Order-in-Original and the appeal has been preferred before the Central Excise and Service Tax Appellant Tribunal (CESTAT) unde....
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..... N.K. Batra, so-called Professor of IIT, Kanpur. When IIT, Kanpur is inquired whether such report has ever been given by IIT, Kanpur, the answer was given by IIT Kanpur in negative (Annexures-12, 12/1). (iv) 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. (v) Several decisions have been given by the Tribunals which have been confirmed by Hon'ble 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 proofs like- (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statut....
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....he decisions relied upon by the petitioner, particularly, the decision rendered in the case of R.A. Castings Ltd. In this context, reference may be made to the decision of the Hon'ble Supreme Court in the case of Assistant Commissioner, Commercial Tax Department, Works Contract Act and Leasing, Kota v. Shukla and Brothers, reported in (2010) 4 SCC 785. In the said decision, the Hon'ble Supreme Court, vide Para-14, has held as under:- "14. The principle of natural justice has twin ingredients: firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself." Further, the Hon'ble High Court of Gujarat, in the case of Vadilal Gases Ltd. v. Union of India, reported in (2015) 64 Taxmann.com 56 (Gujarat), in paras 10 and 11, has held as under:- "10. At this juncture, reference may be made to the ....
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....d product or for at least 1000 such unit, if any other product is involved, so that average consumption of electricity can be accurately measured by the respondent-department. Electricity consumption, which is based upon Dr. N.K. Batra's report, is absolutely useless, with reference to the units for which allegation is levelled for clandestine removal without carrying out any experiment of consumption of electricity in the very same unit. Hence, we, hereby direct the 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. D....
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....Unfortunately, no positive evidence is coming on record to that effect. Article 265 of the Constitution of India says that no tax shall be levied or collected except by authority of law. Unless the manufacture of the steel ingots is proved to the hilt by authentic, reliable and credible evidence, duty cannot be demanded on the basis of hypothesis and theoretical calculations, without taking into consideration the ground realities of the functioning of the factories. 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....
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....iii) Commissioner of Central Excise, Madurai v. Madras Suspensions Ltd. reported in 2003 (156) E.L.T.807 (Tri.- Chennai); (iv) Commissioner of Central Excise, Coimbatore v. Sangamitra Cotton Mills (P) Ltd. reported in 2004 (163) E.L.T. 472 (Tri. Chennai); (v) Commissioner of Central Excise Coimbatore v. Velavan Spinning Mills reported in 2004 (167) E.L.T. 91 (Tri.- Chennai); (vi) M. Veerabadhran and others v. Commissioner of Central 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 indifferent 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 appellant....
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.... in June-July, 2006. (d) Report of Executive Director, All India Induction Furnace Association, New Delhi, and all these reports say different electricity consumption, per ton. These facts have been referred in paragraph Nos. 19 & 20 of the decision reported in 237 ELT 674 and the same reads as under :- "19. The main question to be decided in the instant appeals here is whether the appellants during the period December 2001 to March, 2005 have actually 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' report; (ii) 1800 KWH/T as per the report by Joi....