TaxTMI 
TaxTMI 
2020 (2) TMI 603
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....m Rs. 2,83,698/- already deposited by the notice. iii. I also impose a penalty of Rs. 1,18,050/- upon M/s Aarti Steels Ltd, Focal Point, Ludhiana under Rule 25 of the Central Excise Rules." 1.2 Respondents have filed cross objections in the matter. 2.1 Respondent's- * Manufacture of various iron and steel products like Ingots, Continuous Cast Billets, Rounds, Bars, Flats, wire rod, various type of wire like Black Wire, Galvanized Wire, Cycle Spoke Wire, Tyre Beed Wire, Rope Wire, Spring Steel Wire, Cable Armouring Wire etc., of Alloy Steel as well as Non Alloy Steel; * They have galvanization facility too; * They manufacture goods on their own behalf and also undertake job-work for others. They also get their goods manufactured on job work from others; * The goods manufactured at every stage of manufacture are identifiable with separate name, form and tariff heading. 2.2 During course of visit undertaken by the Officers of DGCEI to the premises of respondent and on scrutiny of records resumed from their premises relating to production and clearance including private records relating consumption of electricity and statements of various persons recorded revealed- * T....
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....at Annexure C1(iii) to this notice; d. Rs. 34,18,857/- (Rupees Thirty Four Lakh eighteen thousand eight hundred and fifty seven only) should not be demanded and recovered from them in terms of proviso to Section 11A(1) of Act on account of 1018.08 MT of steel rounds and rods detailed under paragraph 6.7 & 10.1.1 and computed at Annexure C1(iv) to this notice; e. Rs. 37,79,322/- (Rupees Thirty seven Lakh seventy nine thousand three hundred and twenty two only) should not be demanded and recovered from them in terms of proviso to Section 11A(1) of Act on account of 1186.980 MT of steel Patra i.e. Flats detailed under paragraph 6.7 & 10.1.1 and computed at Annexure C1(v) to this notice; f. Rs. 44,22,347/- (Rupees Forty Four Lakh twenty two thousand three hundred and forty seven only) should not be demanded and recovered from them in terms of proviso to Section 11A(1) of Act on account of 976.227 MT of steel wires detailed under paragraph 6.7 & 10.1.1 and computed at Annexure C1(vi) to this notice; g. Rs. 1,68,63,657/- (Rupees One Crore Sixty Eight Lakh Sixty Three thousand six hundred and fifty seven only) should not be demanded and recovered from them in terms of proviso ....
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.... 3.1 We have heard Shri Rajeev Gupta, Commissioner and Shri Vijay Gupta, Assistant Commissioner, Authorized Representatives for the Revenue and Shri R Santhanam for the respondents. 3.2 arguing for the revenue learned Authorized Representative submitted that- * Adjudicating authority has erroneously partly dropped the demand made in the respect of the shortages determined during the course of physical stock verification. The stock verification was done in the presence of the respondent representatives and with their assistance. Respondents had admitted the shortages and have paid the amount of duty due on the shortages so determined; * In respect of the demand made on the steel ingots on the basis of the electricity consumption, the order of adjudicating authority is erroneous as the power/ electricity consumption of 775 KWH/ PMT of Steel Ingots was not made on the basis of any tests conducted by the respondent or any agency appointed but was determined on the actual production records for the day prior to the day of visit made available by the respondents. Since this has been determined on the basis of normal production made the and not in the test environment, it reflects t....
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....side on the above accounts;. 3.3 Arguing for the respondents learned advocate, submitted that Commissioner has in the impugned order considered the issues raised in the show cause notice in right perspective and have recorded his findings accordingly. It is settled law that- * Demand of duty cannot be made on the basis of assumptions and presumptions but has to be made on the basis concrete evidence of production and clearance of goods; * Tribunal has in series of decisions has held that demand made on the basis of consumption of electricity per unit of goods produced cannot be sustained. Thus the demand made on the basis of electricity consumption taken at 775 unit per metric ton cannot be sustained as has been held by the Commissioner in the impugned order; * They had properly accounted for the production of excisable goods produced on public holidays. Since the production could not have been accounted on the day of production being public holiday, the same has been accounted on subsequent days. All such goods have been duly accounted in the production records and cleared on the payment of duty. The order of Commissioner on this account cannot be challenged. * In respect....
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.... Noticee by the DGCEI officers, shortage of 84.434 MT of wire was detected. All other raw materials, work in progress and finished goods were found tallied with the recorded balances. On that particular date, the Noticee has contended that they had a recorded stocks of raw materials, work in progress and finished goods totalling upto 12818.041 MT. I have gone through the stock taking report prepared on spot. As per stock verification report the goods were not physically weighed but were worked out on the basis of average weight of lots/ bundles/ pieces etc. Stock taking on average basis cannot be substitute of actual weighment. The notice has pointed out that a stock of rusted wire rods weighing 49.2 MT in 256 bundles, that were lying in the factory of the notices in coil form, was not counted while working out shortages in the factory. And this fact has been duly incorporated at page 3 of the Annexure to Panchnama dated 4.2.2004. I reproduce the relevant stock taking portion from panchnama which I as follows: "iv) Wire rods in coil form (old and rusted stock) said to be scarp. 1. Wire rods of average weight 200 kgs- total weight of 206 bundles = 41.2 MT 2. Wire rods of av....
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....apparent on record, hence, noticee's act of deposit of the said amount does not vitiate their rights and they are entitled to claim relief on this count. The said amount remains as deposit with the Government, till the amount is appropriated after determination of duty liability. Thus I find that actual shortage in stocks of wire rods was 35.134 MT only. Admitting the stock taking report to be correct, the demand for central excise duty on shortage of only 35.134 MT of wire rods amounting to Rs. 1,18,050/- is sustainable." 4.3.2 We are in total agreement with the reasoning adopted by the Commissioner in above referred paragraphs. In fact the rusted wire rods found during the course of stock taking an recorded in the panchnama have arisen out of the stock of wire rods recorded in the production records maintained by the respondents, and hence they continue to be part of the stock available with them. It is not the case of the department in appeal that this rusted stock have been accounted elsewhere in the production records as old and rusted wire rods in coil form/ scarp. Hence we reject the submissions made by the appellant revenue on this account. 4.4.1 In respect of the issue ....
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..... I find that the power consumption in the range of 903-1028 is acceptablehere to DGCEI. In the same show cause notice I observe that the duty has been demanded where the power consumption is more than 775 unit/ PMT. No justification for adopting such bench marks has been given in the notice. 3.44 In the show cause notice, the variation/ fluctuation of pwer consumption per MT of Ingot produced was noticed at 1017 units, 972 units & 983 units on 17.1.2004, 19.1.2004 and 22.1.2004 respectively. The noticee has pointed out that the demand for the entire period of August 2001 to 2004 has been worked out by taking benchmark of 775 unit/ PMT. The investigating officer has taken 775 units of electricity consumption as benchmark for alleging suppression of production in furnace division, which is patently wrong. There is no compounded levy on the product. The electricity consumed on a single day cannot be made the basis for demanding duty for aperiod of 3 years. The consumption of electricity depends on various factors like quality of raw materials used, the source and quality of power, as well as rejections. The investigating officer has just applied formula and actual production is su....
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....t in absence of quality control staff, no production was entered in RG-1 records on the said days, but entered in their statutory records only on subsequent days after quality control check found it in order and hence acceptable. Hence demand of duty based on account of this allegation is not sustainable." 4.5.2 Commissioner is correct in his conclusion that the goods were entered in the production records maintained by the respondents only after quality inspection and clearance. During the period of demand it was for the respondent assessee to determine at which stage the he enters the finished goods in his production records unlike the earlier period when an RG-1 stage was prescribed by the department. There seem to be no error in the approach adopted by the respondent in entering the goods in the production records only after the completion of quality control checks. Undisputedly though production was happening on the national/ public holidays, the goods could not have been entered in the production records awaiting the quality inspection which would happen on subsequent days. Thus the issue of non recording of production on national/ public holidays is reasonably explained by....
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....56.42 Pr 2518.2 37 2406.4 63 0.000 2406.4 63 111.77 4 May 2918.5 27 2796.5 95 0.000 2796.5 95 121.93 2 Jun 2770.6 14 2576.6 59 0.000 2576.6 59 193.95 5 July 2896.4 36 2719.0 21 0.000 2719.0 21 177.41 5 Aug 2977.5 36 2708.3 12 5.030 2713.3 42 264.19 4 Sept 2921.5 76 2689.0 45 0.000 2689.0 45 232.53 1 Oct 2766.6 43 2543.2 53 8.765 2552.0 18 214.62 5 Nov 2650.4 07 2422.4 00 8.908 2431.3 08 219.09 9 Dec 03 3057.3 75 2864.4 45 30.762 2895.2 07 162.16 8 Jan- 04 3046.7 75 2703.7 85 100.85 4 2804.6 39 242.13 6 69525. 019 65903. 695 1343.7 91 67247. 486 2277.5 33 Then we can compare the ER-1 figures with RG-1 figures figure for the entire period which are as below: Period Official Production Difference (1-4) As per ER-1 As per (RG-1) Annex C-2 8 9 10 Jan- 02 2542.390 2542.390 0.000 Feb 2566.378 2566.378 0.000 Mar 2450.431 2450.431 0.000 Apr 2551.067 2551.067 0.000 May 2382.165 2382.165 0.000 Jun 2548.428 2548.428 0.000 July 2675.760 2675.760 0.000 Aug 2693.808 2693.808 0....
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....tatutory records figures is the occurrence of non conformities/ rejections within the factory premises. Since the noticee has an integrated unit, the rejections occurring at different stages have different nomenclature. As per records the non conformities can be of following types:- 1. Commercial grade sale 2. Rejected by Q C department but with rectifiable defects 3. Scrapped in portion and partially usable. 4. Totally scrapped and remelted. I find that sometimes these non conformities are entered In private records but in official records they may find place under the rejected/ waste/ repaired category and there may not be one to one correlation, between the private and official because they have different purposes for maintaining such records. 3.31 ....... 3.32 ....... 3.33 From the data reproduced above I find that there has been some mis-calculation of figures, while working out demand on thi basis. The major omission on the part of investigating officer is that he has not considered the production figures of job-work that te noticee did for other Central Excise assessees. The job work records were duly resumed by the DGCEI. The fact of job work figu....