TaxTMI 
TaxTMI 
2022 (4) TMI 476
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....o.1 are also availing Cenvat Credit of duty paid on inputs in terms of Cenvat Credit Rules, 2004 as amended. They had purchased Induction furnace of 8 MT capacity from M/s. Megatherm Electronic, Pvt. Ltd., Kolkata (for short, referred to as "M/s Megatherm") in the year 2001, which is in use by them since then. They use electricity supplied by Maharashtra State Electricity Board. The raw materials are charged in the crucible of induction furnace to convert the same into molten mass, which is poured in the moulds to obtain ingots/runners/risers and the said process is termed as one heat. 1.2 Up to the period 30.06.2005, the above factory was owned by M/s. Saggu Castings Pvt. Ltd.(for short, referred to as the "appellant No.2"), which was subsequently taken over by the appellant No.1. Shri Malkiatsingh Jagatsingh Saggu (for short, referred to as the "appellant No.3") was the former Director of M/s. Saggu Castings Pvt. Ltd. Shri Bharatbhai B. Doshi (for short, referred to as the "appellant No. 4") is the Director of the appellant No.1 company and also the partner in other manufacturing and trading companies. 1.3 In this case, the Department had gathered information th....
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....oad Transport Authority and the statements recorded from the transporters, who were engaged for transporting the goods belonging to the appellant No.1. 1.4. Upon detailed investigation into the matter, the department had concluded that the appellant No.1 had suppressed the production of ingots and removed the same without payment of Central Excise duty. Accordingly, show cause proceedings were initiated by the department against all the appellants, proposing confirmation of the Central Excise duty demand along with interest and for imposition of penalties. The matter arising out of the show cause notices, were adjudicated vide orders dated 01.06.2009 and 10.06,2010 by the learned Commissioner of Central Excise, Nagpur (for short, referred to as the "impugned orders"), wherein the proposals made against the appellants were confirmed in the following manner: Appeal No. E/986/09 E/1787/10 E/985/09 E/1786/10 E/948/09 Party Name Orange City Alloys Pvt. Ltd. Orange City Alloys Pvt. Ltd. Mr. Bharat B. Doshi, Director Mr. Bharat B. Doshi, Director Malkiatsingh Jagatsingh Saggu SCN Date 9.1.2009 7.1.2010 9.1.2009 7.1.2010 7.1.20....
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.... the year 1989-90 for Concast steel making, since the process of steel making through Induction Furnaces was in the initial stages and that for the said reason, the author of the article had confirmed that the opinion furnished was required to be updated and corrected. On the contrary, the learned Advocate has referred to the report prepared by M/s. National Institute of Secondary Steel Technology for the period June-July 2006 wherein, it has been stated that electricity consumption per MT of steel ingot would ideally be ranging between 1427 KWH of power to produce 1 MT of Pencil Ingots. 2.3. With regard to the allegation that the appellants had procured bogus purchase invoices and cleared excisable ingots in the garb of traded goods, Learned Advocate submitted that trading income relates to supply of angles, flats, channels, etc. He further submitted that receipt of the traded goods has actually been acknowledged by the buyer, for which the appellants had received the sale proceeds. Further, Learned Advocate submitted that the findings regarding excess burning loss in the impugned order are without any legal basis inasmuch as 10% burning loss is permissible as per the gui....
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....Vs. CCE - 2009 (246) ELT 332 (T) (xv) Southern Ispat Ltd. Vs. CCE - 2009 (248) ELT 270 (T) (xvi) Saravana Alloys Steels Pvt.Ltd. Vs. CCE - 2011 (274) ELT 248 (T) 3. On the other hand, the Learned AR appearing for Revenue reiterated the findings recorded in the impugned order. He further submitted that the duty computation aspect have been appropriately dealt with in the impugned orders passed by the Learned adjudicating authority and the same had been done on admitted electricity consumption of 925 Units per MT prior to 20.10.2005 and 860 Units per MT thereafter. The Learned AR has relied upon the following judgments to strengthen the stand of Revenue that there is no infirmity in the impugned order passed by the original authority: (i) Triveni Rubber & Plastics v/s Collector of CEx., Cochin-1994(72)ELT 897(Tribunal) (ii) Triveni Rubber & Plastics v/s Collector of CEx. Cochin-1994(73)ELT 7(SC) (iii) Rattan Steel Works v/s CCE, Chennai-2009(236) ELT 152 (Tri-Chennai) (iv) Nagpal Steels Ltd. v/s Collector, of CEx, Chandigarh-2000(125)ELT 1147(Tribunal) (v) R.P....
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....y of the appellant No.1 and observed that the power consumption was 1008 Units/ MT and 1058 Units/MT. Such report of the department reflects that there was fluctuation of 50 units in the course of a single day in two consecutive heats. Therefore, it is evident that the fixed norm of 925 Units or 860 Units, as the case may be, adopted by the department did not find support from any authoritative journals and technical write-ups furnished by the expert in the field. Further, it is also evident from the records that above power consumption as reported by the department is matching with the figures reflected by the appellants in their records, meant for scrutiny by the statutory authorities. The law is well settled that consumption of electricity per heat depends upon several factors such as nature and character of scrap, efficiency of the labour, upkeep of furnace, the desired characteristics of the final material, power fluctuation, etc. Therefore, no uniform criteria could be applied to determine the quantity of final product produced on the basis of electricity consumption. 7.2 Further, it is also noticed that the power consumption in the appellant's factory ranges between....
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.... actual power consumption in the type of furnace installed in the appellants' factory. On the contrary, we find that National Institute of Secondary Steel Technology (NISST), Mandi, Gobindgarh (Punjab) in their report prepared in June-July 2006, have stated that electricity consumption per MT of steel ingot for an Induction Furnace has been shown as high as 1760 units. In the said report, it is suggested that average energy consumption in the industry could be about 1427 KWH of power to produce 1 MT of pencil ingots; however higher consumption of electricity is not ruled out by individual units. The report also says that on account of wide variations, no bench marking of electricity consumption can be done as such. Further, it is also noticed that the Joint Plant Committee constituted by Govt. of India have furnished a report in 2004 titled "Survey of Electric Furnace Industries in India", clarifying that the power consumption required to produce 1 MT of ingots from scrap is 1800 units/ MT and the same can go beyond 2000 units/ MT. 7.5 The above evidences prove that there is wide variation in the consumption of electricity for the manufacture of one MT of steel ingots. There is ....
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....n of M/s. ABC Weighbridge, Statement dated 7.11.2005 of Mr. Rajesh Rangrao, owner of Prakash Transporter & Statement dated 8.8.2006 of Mr. Gurmeet Singh, Transporter. (c) On comparison of such entries with statutory records of the appellants, some entries were found reflected in both sets of records and some entries in weighment records were not found in the appellants' books. 8.1 We find that the department in this case has linked the trading income with the clearance of alleged suppressed ingots by the appellants. For the said purpose, the adjudicating authority has relied upon the statement of the transporters to hold that the appellants had procured bogus purchase invoices and cleared excisable ingots in the garb of traded goods. In this context, the appellants have contended that the trading income relates to supply of angles, flats, channels, etc. and such trading activities were undertaken at the appellant's Bhilai Unit and not from the appellants' factory. On examination of case records, we also find that the transporters in their statements also stated that they had not transported MS angles, channels, flats etc., from the appellants Bhilai Unit to ....
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....ted in the Income Tax department. Thus, in the absence of proper substantiation of the case by Revenue, we have no hesitation to note that in absence of any plausible evidence to the contrary, there is no other option left with us, but to accept the contentions of the appellants that Revenue had not booked the case in the manner as contemplated in the statute read with the authoritative judicial pronouncements. Therefore, the action on the part of Revenue in disbelieving and disregarding generation of profits from trading transactions and to assume the same to be sale proceeds of ingots clandestinely manufactured and cleared by the appellants, is completely without any basis or jurisdiction. It is a settled principle of law that the burden of proof in the case of clandestine removal is on the Department and it cannot be discharged on the basis of suspicions and surmises. 8.3 The burning loss in this case was less than 10%, except for the year 2005-06, when the same was 11.1% and marginally in the higher side. It is a standard practice in the trade of manufacture of iron and steel that 10% burning loss is usually permissible, owing to the reason of various factors. Consider....
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.... department to allege suppressed production and clearance of ingots by the appellants without payment of excise duty, is not sustainable under the law. 9. The law is well settled that to prove clandestine removal, the department has to produce evidence of purchase of additional raw material, sale of clandestinely removed goods, mode of payment, flow back of the fund, transport report for movement of raw material and finished products etc. However, no discrepancy, whatsoever, has been found in the records of the present appellants relating to raw materials, finished goods, production, clearances, opening and closing stock, work in progress etc. Therefore, the charges levelled against the appellants that the finished goods were clandestinely manufactured and removed by the appellants are without any basis and the impugned orders passed in confirming the adjudged demands are liable to be set aside. 9.1 The issue identical to the present case arose in the case of R.A. Castings Pvt. Ltd. Vs. CCE - 2009 (237) ELT 674 (Tri.), wherein the allegation of clandestine removal of ingots was charged on the basis that (i) the assessee was showing less production in comparison to....
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....s was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. Even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived from the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods and that cannot be made the basis to establish a case of clandestine removal. In any case, the Commissioner has not determined the duty liability on the basis of the profit shown in the balance sheets. He has used this only as corroboration and not the primary basis for determining the quantum of production of steel ingots. Once the main evidence itself is found to be unreliable, such figures of profits etc. in the balance sheets cannot form a basis for rejecting the quantum of production appearing in the records of the appellants. 9.2 The aforesaid decision of the Tribunal in the case of R.A. Casting Pvt. Ltd. is affirmed by the Hon'ble High Court reported at CCE Vs. R.A. Castings Pvt. Ltd. - 2011 (269) ELT 337 (All.) and further maintained by the Hon'ble Supreme Court reported at 2011 (269) ELT ....
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....and clearance to sustain the demand. It is contended by Revenue that furnaces installed in the factory of present appellants were in sound condition as compared to R.A. Castings (supra), however I neither could find any material in support of this argument, nor any such finding in the Orders impugned in the appeals. The Revenue sought to rely on an order passed by Tribunal in Gulabchand Silk Mills Pvt. Ltd. v. CCE, Hyderabad-II, 2005 (184) E.L.T. 263, however the same was also considered in R.A. Castings (supra). It has been contention of the department that the Department is not required to prove its case to its mathematical precision, by relying on judgment of the Hon'ble Supreme Court in the case of D. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.) relied upon by the Commissioner as well as the Hon'ble Member (Technical). It is seen that even this judgment was considered in R.A. Castings (supra)..... 91. There can be no dispute on the fact that in adjudication proceedings, the charge of clandestine removal is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions. Regarding the cla....
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....g income of the respondent was sought to be linked to the sale on clandestine clearance of the manufactured goods. We find that for such assertion to be established, first of all, that the trading income should be proved to be not on account of trading and secondly, it should be proved that such income is actually from the sale of clandestinely manufactured and cleared excisable goods. While precise evidence to tally the income may not be possible, at least demonstratively it should be shown that the income is out of sale of unaccounted excisable goods. On this account, we find no sustainable evidence has been brought out by the Revenue in the proceedings against the respondent. Further, we note that all the incomes have been taken out of recorded balance sheet and the attempt by the Revenue to interfere the linkage between the clandestine clearance of the excisable goods to that income has not been materially supported by any evidence. We also note that the main respondent had actually suffered losses of more than Rs. 1 crore/each during the year 2004-05 and 2005-06 as per the books of accounts. We are in agreement with the Original Authority and hold that in the absence of any ta....
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....by different judicial forums in the cases, relied upon by the appellants. It has consistently been held that high consumption of electricity by itself not a ground to infer suppression of production. The onus is on the department to prove allegation of clandestine removal with positive and concrete evidence. 10. The ratio of the decisions cited by the learned AR for Revenue is distinguishable from the facts of the present case, inasmuch as there were existence of direct and circumstantial evidences in support of clandestine manufacture and removal of the finished goods in those decided cases; whereas, in the cases in hand, the department had only relied upon the articles published in journals, report of some agencies, third party records etc., to conclude that the disputed goods were manufactured and cleared in the clandestine manner. Further, we also find that the decisions relied upon by Revenue were considered in the case laws referred to and relied upon by the Learned Advocate for the appellants, wherein it has been consistently held that demand of excise duty cannot be confirmed on the basis of electricity consumption and statement of various transporters. It has furt....