TaxTMI 
TaxTMI 
2017 (7) TMI 1369
X X X X Extracts X X X X
X X X X Extracts X X X X
....matrix : • This writ petitioner is manufacturing M.S. Ingots since long. • Show cause notice dated 7-2-2014 was given by the Commissioner, Central Excise and Service Tax, Jamshedpur for the period running from January, 2009 to September, 2013. • Personal hearing in the case was held on 29-10-2014, 3-12-2014 and 22-12-2014. • Thereafter, the Order-in-Original was passed by the Commissioner, Central Excise and Service Tax, Jamshedpur on 27-2-2015/13-2-2015 (Annexure-3). • The petitioner had earlier filed an Appeal before the Learned CESTAT, Kolkata which was subsequently dismissed vide order dated 6-1-2016. • The petitioner further filed Tax Appeal being T.A. No. 24 of 2016 before this Hon'ble Court primarily challenging the order passed by the Learned CESTAT, Kolkata which was withdrawn. • 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 princi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch has not been gone into by the respondents. The whole show cause notice is based upon presumptions and surmises. The burden of proof lies upon the respondents that there is 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 relied upon the decisions which are as under :- (a) R.A. Castings decisions reported in 2009 (237) E.L.T. 674 (Tri.), which is confirmed by the Division Bench of Allahabad High Court reported in 2010 (1) taxman.com. 342 (Allahabad) = 2012 (26) S.T.R. 262 (All.) = 2011 (269) E.L.T. 337 (All.) against which SLP preferred by the department, has also been dismissed, and (b) W.P. No. 173 of 2014 decided on 22-4-2014 by the Calcutta High Court [2014 (306) E.L.T. 216 (Cal.)]. • Counsel for the petitioner has pointed ou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 even a circular has been issued, which is at Annexure-2, dated 26-6-2014 that whenever any decision has been finally accepted by the respondents-department, the same has to be followed in other cases. This circular has also not been followed in this case. In fact, the respondents could not prove the clandestine removal of the finished products viz. M.S. Ingots and hence show cause notice dated 7-2-2014 as well as Order-in-Original dated 27-2-2015/13-3-2015 which are at Annexure-1 and Annxure-3, respectively, may kindly be quashed and set aside. 4. 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 Appellate Tribunal (CESTAT) under Section 35(B) of the Central Excise Act, 1944. In fact, appeal has also been preferred. • Counsel appearing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference of All India Induction Furnace Association report. (iii) Counsel appearing for the petitioner has relied upon several decisions, as stated hereinabove. It ought to be kept in mind by the respondents that the electricity consumption pattern can be a corroborative ground and not a substantive ground at all. Thousands of possibilities cannot be equated with one truth. The grounds, which are referred in the Order-in-Original, are in fact leading the respondents towards the highest probabilities and nothing beyond that to suspect that there is clandestine removal of the finished product by the noticee. Nonetheless, for exact proof of unaccounted manufacturing of finished products and for clandestine removal thereof, more labour was required to be done by the respondents. It has become fashion with the respondents-department to rely upon a document, since 2003 onwards, which is known as report given by Dr. N.K. Batra, so-called Professor of IIT, Kanpur. Petitioner is in possession of an e-mail communicated by IIT as to whether such report has ever been given by IIT, Kanpur, the answer given by IIT, Kanpur in negative (Annexure-4, 4/1 to the memo of this petit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts 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. 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's 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, they are also turning deaf-ear to their own circular dated 26-6-2014 (Annexure-2 to the memo of this writ petition). In this case, the respondents are relying upon Dr. N.K. Batra's report. All these are nothing, but, the possibilities, for clandestine removal, but, for proving the clandestine removal, the substantive piece of evi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 11. Examining the facts of the present case in the light of the above decision, while it cannot be said that the impugned orders are totally non-reasoned orders, at the same time, the main contention advanced on behalf of the petitioner has not been dealt with and no reasons have been assigned for not accepting the same. The impugned order does not show that the authority concerned has applied its mind to the contention raised by the petitioner. Therefore, as held by the Supreme Court in the above decision, the principles of natural justice would stand violated in the light of the fact that the concerned authority has not applied its mind to the principal contention raised by the petitioner, inasmuch as, it has not given any reason in respect thereof." In view of the aforesaid decisions, If there is a violation of principle of natural justice, writ is always tenable at law. (vii) Thus, the department has not done any homework and the show cause notice dated 7-2-2014 (Annexur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oticee. This exercise is must before issuing the show cause notice by the respondent-department, whenever the department is levelling allegation of clandestine removal on the basis of electricity consumption pattern. Instead of doing this exercise, straight way, Dr. N.K. Batra's report has been relied upon, which has no relevance with the factory premises of the noticee. Hence, such report shall not be relied upon by the respondents, unless the aforesaid experiment is carried out at the factory premises of the noticee. This is not a first case in which such guidelines has been given. Observations made in paragraph Nos. 20.1, 20.2, 21, 22.1, 23 & 24 of the decisions rendered by the Tribunal in the case of R.A. Castings Pvt. Ltd. v. CCE, reported in 2009 (237) E.L.T. 674 (Tri.) read as under :- "20.1 From the perusal of these reports, we find that wide variations in the consumption of electricity have been reported for the manufacture of one MT of steel ingots. This renders the norm of 1046 units adopted by the Revenue as arbitrary. Why not adopt the norm 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 n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....73E till date by the Revenue and notified by it. The electricity consumption varies from one unit to another and from one date to another and even from one heat to another within the same date. There is, therefore, no universal and uniformly acceptable standard of electricity consumption, which can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. In the following case laws, it has been held that the consumption of the electricity alone is not sufficient to determine the production : (i) Pure Enterprises (P) Ltd. v. CCE, Rajkot - 1999 (111) E.L.T. 407 (Tri.) (ii) Kapadia Dyeing Bleaching and Finishing Works v. CCE, Surat - 2000 (124) E.L.T. 821 (Tri.) (iii) A. Arti Leathers (P) Ltd. v. CCE and C, Ahmedabad - 2001 (136) E.L.T. 1255 (Tri. - Mum.) (iv) Parshuram Cement Ltd. v. CCE, Lucknow - 2003 (160) E.L.T. 213 (Tri. - Del.) (v) Mukesh Dye Works v. CCE, Mumbai-VI - 2006 (196) E.L.T. 237 (Tri. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 24. The law is well settled that in every case of alleged clandestine removal, the onus is on the Revenue to prove what is alleged 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." (emphasis supplied) (ix) The aforesaid decision has been upheld by the Division Bench of Allahabad High Court in a decision reported in 2010 (1) taxman.com 342 (Allahabad) and SLP preferred against the said decision has also been dismissed by the Hon'ble Supreme Court. Thus, the report of Dr. N.K. Batra has been several times, criticized by various adjudicating authority vis-à-vis clandestine removal and the respondent-department has also issued a Circular dated 26-6-2014 and several times such notice has also been dropped while passing the Order-in-Original, as stated hereinabove, as pointed out by the Counsel for the petitioner. Despite these facts, in violation of such directions and the circular of the department, the respondents are still issuing show cause notices, levelling allegations of clandestine removal of the finished product, based upon ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; 1800 KWH/T as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India; (iii) 1427 KWH/T as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv) 650 units to 820 units/MT as per the Executive Director. All India Induction Furnace Association, New Delhi : (v) 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.L.T. 1147". (emphasis supplied) In view of the aforesaid electricity consumption report, per tonnage, it appears that the variation is from 555 units to 1800 KWH/Per Ton. This is mainly because of the nature of the machinery utilized by the noticee. Looking to the facts of the present case, the electricity consumption pattern as has been given in Annexure-F, as stated in paragraph 5 of the show cause notice, which is at page no. 53 of this memo of writ petition which reveals that this petitioner has consumed electricity absolutely in consonance with the report given by Joint Plant Committee, constituted by the Ministry of Steel, Government of India and for few months it is even less than that. ....