TaxTMI 
TaxTMI 
2020 (11) TMI 434
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....nufacture of aforementioned final products. They were having two induction furnace for manufacture of M.S. Ingots of capacity 3.0 M.T. each. The main raw materials /inputs are Sponge Iron, Iron Scrap, Pig Iron, etc. 3. Revenue having intelligence that induction furnace units, in general, which were engaged in the manufacture of M.S. Ingots, were engaged in clandestine manufacture and removal and were not disclosing their true production and clearance to the Revenue. Revenue conducted search and inquiry with one Shri S.K. Pansari, Proprietor of M/s.Monu Steels (a broker engaged in the business of facilitating sale and purchase transactions of Iron & Steel products on behalf of manufacturer, seller and purchaser of Iron & Steel products on commission basis) and the office premises of M/s.Monu Steels were searched by the central excise officers on 15.01.2007. The search was conducted in the presence of Shri S.K. Pansari, Proprietor and two independent panchas and drawn panchnama on 15.1.2007. During the course of search, an amount of Rs. 3,50,000/- was recovered from the premises along with incriminating documents like diaries, files, ledger, etc. As M/s. Monu Steels could not give....
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.... not been paid "(r)" means Regular payment means payment in 10-15 days "ND" means : Payment on next day. "Ex" means : the material is purchased from the spot (i.e. factory gate) "FOR" means the delivery of material is on FOR basis. xi) That all the entries in his records relates to the year 2006. xii) That the payment of goods mentioned against (o) is made in cash by the buyer either to the seller or to him, and he disburses the payment to the seller in such cases. xiii) That the amount of Rs. 3,50,000/- recovered from his premises pertains to cash balance of his firm. 5. Again Shri S.K. Pansari, Proprietor of M/s.Monu Steel in his statements recorded on 19.09.2007, 21.09.2007, 30.05.2008 and 2.6.2008 under Section 14 of the Central Excise Act, 1944 reiterated his submissions made by him in his statement on 15.01.2007 and also explained about the details of entries found mentioned in the records/diaries recovered from his office premises under Panchnama on 15.01.2007. He also identified the names of units mentioned in the diaries/recovered, supra, which apart from other ingot manufacturing units, included this appell....
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....teels, consisted the details viz. name of manufacturer/consignor, name of purchaser/consignee, transaction code as given by Mr. S.K. Pansari, date of removal, description of goods removed , quantity of goods removed, rate PMT, total ordered quantity, date of receipt of goods by consignee, amount received, date of payment, amount paid, etc. have been compiled. 10. When the sales details of MS Ingots pertaining to appellant as mentioned in the records recovered from Monu Steels were compared vis-à-vis the sale details of appellant, as furnished by them, under statement dated 15.06.2009, it was observed that invoices have been issued and duty has been paid in respect of some of the clearances as detailed in Annexure 'A' to show cause notice. As per the details of clearances of MS ingots by appellant through Monu Steel as per recovered records, which reveals that M/s.Hi Tech Abrasives Ltd. had removed/cleared 2047.599 ingots valued at Rs. 3,64,91,442/- to various parties during the period 2006-2007, through M/s.Monu Steels (Prop. Shri S.K. Pansari) clandestinely (as per Annexure 'C' to show cause notice), without payment of central excise duty and without issue of any central....
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....i S.K. Pansari only. 14. As per standard, the electricity consumption for the manufacture of 1 MT of MS Ingots is around 830 Units/MT. The monthly average consumption of electricity and production of MS Ingots by appellant reveals that during the period 2005-2006 to September, 2009, the electricity consumption (per MT of MS Ingots) varied from a high of 2718 MT to 760 units/MT, which clearly indicates that the daily stock account (RG-I) and the production of MS Ingots have been doctored to suit their malafide intention to remove MS Ingots without payment of duty clandestinely, since the parameters for production of mild steel in an induction furnace, is more or less same over a period. 15. Acting upon another intelligence that one M/s. Kailash Traders, Prop. Shri Kailash Agarwal was also working as a commission agent and was involved in arranging purchase and sale of sponge iron for manufactures, inter alia, involved in abetting clandestine removal of final products viz. sponge iron, through parallel invoices, etc. The Central Excise Officers conducted the search of the premises of M/s.Kailash Traders (Noticee No.4) on 20.12.2006 and proceedings were recorded under panchnama ....
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....uality of Raw materials, unskilled labour, breakdown of furnace, frequent power failure, recycling of slag in furnace, consumption of power by auxiliary equipment, more consumption of power at the time of manufacture of shots and grits. He further stated that the consumption of electricity varies with the type of raw materials charged. The consumption will be less if steel scrap is used and consumption is more when sponge iron and /or pig iron is used. 20. The Revenue was not convinced with the explanation given for excess consumption of electricity. Further, there also appear to be underutilisation of the furnace capacity, excess consumption of pig iron as a ratio of total raw materials. 21. Accordingly, on the basis of assumption that 830 units are sufficient for manufacture of 1 MT of ingots on the basis of the electricity consumption, the production was estimated. Such estimated production for each financial year was adjusted with the production declared in ER-I Return and accordingly, suppressed production was worked out for the period April, 2005 to September, 2009 i.e. 19084.853 MT as detailed in para 8.6 of the show cause notice. On such suppressed production, central....
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.... alleged standard of consumption of electricity, relying upon the ruling of this Tribunal in the case of R.A. Castings Pvt. Ltd. - 2009 (237) ELT 674, which was upheld by the Hon'ble Allahabad High Court reported at 2011 (269) ELT 337 and further, the SLP filed by the Revenue was also dismissed reported at 2019 (269) ELT A 108 (SC). 24. Ld. Commissioner further observed that the allegation of suppression of production in the show cause notice is on the basis of the calculation of clandestine removal of 2047.599 MT of M.S. Ingots as per the incriminating records recovered from M/s.Monu Steels, under utilisation of installed capacity, disproportionate /excess consumption of raw materials and clandestine purchase of 244.100 MT of sponge iron as revealed from the incriminating records recovered from M/s.Kailash Traders. 25. It was further observed that as per the entries in the records of M/s.Monu Steels, the appellants have despatched 133 consignments to various buyers and on comparison of the records of the appellants, the clandestine clearance has been worked out at 2047.599 MT of ingots, as contained in Annexure - C to the show cause notice. Further, giving allowance for appa....
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....he various statements furnished by Mr. S.K. Pansari are of a general nature, and do not reflect any concrete evidence in the case of the appellant. It has been held that in various rulings, that the demand cannot be confirmed on the basis of records seized from the premises of third parties, without any corroborative evidence, by the Department. 28. To support his contention, he relied upon the following case laws:- (a) Rudra Ventures Pvt. Ltd. -2016 (344) ELT 472 (Tribunal) (b) CCE, Raipur Vs. P.D. Industries Pvt.Ltd.-2016(340) ELT 249 (c) Raipur Forging Pvt. Ltd. -2016(335) ELT 297 (T) (d) CCE Vs. Chola Spinning Mills Pvt.Ltd.-2009(246)ELT 267 (Tribunal-Chennai). (e) Agrasen Syntex Pvt.Ltd.-2003(154)ELT 431. In all the above cases, the Hon'ble Courts and Tribunal have held in clear terms that no duty can be demanded from a manufacturer on the basis of documents, which were not seized from their premises. 29. Ld. Counsel also urged that the entire case has been made out on the basis of third party documents and the statements of their proprietors (outsiders) recorded therein. Appearance of names in private records, raises doubt....