TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1641
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....itional Commissioner, Central Excise and Service Tax, Jamshedpur for the period running from 2004-05 to 2005-06. * The petitioner appeared before respondent No. 3 pursuant to the show cause notice and filed its reply on 15th January, 2008. * In the reply filed by the petitioner, it had specifically prayed for an opportunity to cross-examine Dr. N.K. Batra, Professor of IIT as the Technical Opinion Report, prepared by him was relied in the show cause notice. * However, in spite of the request made by the petitioner, the petitioner was not granted any opportunity to cross-examine Dr. N.K. Batra. * Thereafter, the Order-in-Original was passed by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur on 29th February, 2008. * Being aggrieved and dissatisfied by the show cause notice as well as by the Order-in-Original, the present writ petition has been preferred. 3. Arguments canvassed by the counsel for the petitioner: * Counsel appearing for the petitioner submitted that there is gross violation of principle of natural justice. The report of Dr. N.K. Batra was referred to and relied upon, in the show cause notice but in spite of specific request of the ....
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....ed product, which has not been discharged, at all, by the respondents. * Counsel appearing for the petitioner has relied upon the decisions which are as under:- (a) R.A. Castings decisions reported in 237 ELT 674, which is confirmed by the Division Bench of Allahabad High Court reported in 2010 (1) taxman.com. 342 (Allahabad), against which SLP preferred by the department, has also been dismissed; and (b) W.P. No. 173 of 2014 decided on 22.04.2014 by the Calcutta High Court. * Counsel for the petitioner has pointed out that in several similarly situated cases, in which Dr. N.K. Batra report has been referred and relied upon, for proving clandestine removal of the finished products, in the show cause, ultimately in the Orders-in-Original, the show cause notices have been dropped by the adjudicating authority itself. The similarly situated cases are as under:- (a) Globe Steel & Alloys Pvt. Ltd., the Order-in-Original:02/Central Excise/commr/2015 dated 31.03.2015, copy whereof has been given by the counsel to the counsel for the respondents. (b) M/s. Madhura Ingots & Steel Co. Pvt. Ltd. Order-in-Original:07/Central Excise/commr/2015 dated 19.05.2015. (c) M/s. Jagannath C....
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....counsel for the respondents that proper opportunity of being heard was given to the petitioner and only thereafter the Order-in-Original dated 29th February, 2008 was passed by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur. 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 29th February, 2008 (Annexure-1 to the memo of this writ petition) mainly for the following facts and reasons: (i) Show-cause notice was given by the respondents on 30th March, 2007 for the period running from 2004-05 to 2005-06 mainly on the ground that there is unrealistic electricity consumption. On this ground, the show-cause notice has been given by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur. (ii) In the show-cause notice, Dr. N.K. Batra's report has been referred to and relied upon. Moreover, there is also reference of Nucleus Group report as well as there is a reference of All India Induction Furnace Association report. (iii) Counsel appearing for the petitioner has relied upon several decisions, as stated hereinabove. It ou....
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....goods with reference to entry/exit of vehicles like Trucks etc in the factory premises. (h) If there is any proof about the loading of the goods in the Truck, like weight of truck etc. at the weighbridge, security gate records, transporter documents such as lorry receipts, statements of the truck drivers, entries of the trucks/vehicles at different check-post different types of forms which are supplied by the Commercial Tax Department, like Road Permit supplied by the commercial tax department, receipts by the consignees etc. This list of evidences to be collected, is not exhaustive. Still there can be similar type of evidences. These documents ought to have been collected by the respondent-department, if at all, they are interested in collection of the correct central excise duty from the noticee upon whom or upon which, allegation of clandestine removal of the finished product is levelled. The electricity consumption report like Dr. N.K. Batra report can hardly be treated as a substantive evidence. Time and again, the decisions have been given by the tribunals, but, the respondents-departments are turning deaf-ear to. In this case, the respondents are relying upon Dr. N.K. Ba....
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.... natural justice, writ is always tenable at law. (viii) Thus, the department has not done any home work and the show cause notice dated 30th March, 2007 has been issued. This type of short cut should not have been followed by the department. There is no shortcut for success. The aforesaid documents and evidences could have been collected very easily by the department, if at all, department is of the opinion that there is a clandestine removal of finished product viz M.S. Ingots by the petitioners. (ix) The respondents have also been given time and again the guidance by various decisions that whenever they are relying upon the electricity consumption pattern, experiment in the very same unit ought to have been carried out for manufacturing of 1 MT of the finished 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....
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....orm of 1800 KWH/T or 1427 KWH/T or 650 to 820 units/MT or 851 units/MT as per various reports referred to above or why not adopt some figure between 555 to 1046 units as norm as per Dr. Batra's report? 20.2 We note that no experiments have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing one MT of steel ingots. It is the basic philosophy in the taxation matters that no tax can be levied on the basis of estimation. In this case, there is added problem. Estimation of production fluctuates widely depending upon the fact as to which report is adopted. Tax is on manufacture and it is to be proved beyond doubt that the goods have been actually manufactured, which are leviable to excise duty. 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 ....
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....s Pvt. Ltd. v. CCE, Kanpur - 1998 (102) E.L.T. 139 (T) (vii) M/s. Padmanabh Dyeing and Finishing Works v. CCE, Vadodara - 1997 (90) E.L.T. 343 (T) (viii) M/s. Madhu Products v. CCE, Hyderabad - 1999 (111) E.L.T. 197 (T). 22.1 For want of evidence relating to the above points, clandestine removal cannot be sustained merely on the basis of the technical opinion report of Mr. Batra. In this connection, the following case laws are relied: (i) Emmtex Synthetics Ltd. v. Commissioner of Central Excise, New Delhi reported in 2003 (151) E.L.T. 170 (Tri.-Del.); (ii) Commr. of Central Excise, Chennai v. Dhanavilas (Madras) Snuff Co. reported in 2003 (153) E.T. 437 (Tri.-Chennai); (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 (....
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....mises of the noticee for production of 1 MT or for production of more than sufficiently large quantity like 1000 units etc. in any other cases, because electricity consumption depends upon the nature of machinery. Even two refrigerators of same kind and type and capacity may not have the same consumption of electricity, because one may be new and another may be old. (xi) Likewise such type of other reports are also available in this country, which are as under:- (a) Dr. N.K. Batra's report (b) Report by Joint Plant Committee constituted by the ministry of steel, Government of India. (c) Report of NISST, Mandi Gobindgarh given 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 rem....
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.... relied upon whereas for rest of the assessee, as per the choice of the respondents, such type of reports will be relied upon and in fact, this has happened in this case. Several Orders-in-Original have been pointed out during the course of arguments by the counsel for the petitioner wherein electricity consumption pattern allegation levelled in show cause notice and ultimately after adjudication, the show cause notice has been dropped. Thus, without experiment is being carried out at the premises of the noticees, use of any of the committee's report for electricity consumption pattern always leads to arbitrariness on the part of the respondent-department. Whenever arbitrariness is present, equality is absent. Equalities and arbitrariness are strong enemies of each other. When equality is present, arbitrariness is absent. 6. Hence, this Court is remanding the matter to the Additional Commissioner, Central Excise & Service Tax, Jamshedpur. This Court is not much going into detail of further arbitrariness in the Order-in-Original. 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. ....