TaxTMI 
TaxTMI 
2022 (9) TMI 1279
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....at the assessee was suppressing the production of its finished products and subsequently clearing the same clandestinely without payment of central excise duty and started investigation. The officers searched the premises of the factory of the assessee and the residence of the Director on 18.10.2012 and seized some documents. They also took stock of the goods and found a shortage of 102.170 M.T. of Ingots. They also recorded statements of various persons during investigation. After completing the investigation, a show cause notice dated 06.11.2013 was issued by the DGCEI, demanding a duty of Rs. 7,93,16,068/- towards the central excise duty on the clandestinely removed goods along with interest and proposing imposition of penalties. This demand was on following 4 counts :- (a) Rs. 7,25,92,853/- was based on electricity consumption in the factory and reckoning the amount of electricity required for production of each ton of MS Ingots during the period April 2009 to June 2012. It was presumed that 31,128.955 M.T. of MS Ingots were clandestinely manufactured and cleared by the assessee. The demand on this count has already been dropped in the impugned order by the Commissioner and t....
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....ransporter or driver was identified or questioned. To manufacture MS Ingots of the quantity indicated more raw material would have been required and no such suppliers of raw material were identified or questioned nor any shortage of raw materials found at the time of stock taking. Further, the sale of such large quantity of goods would result in large cash transactions of over Rs. 4.5 crores and no cash was seized by the Department or detected. There is not even a single case of seizure of any consignment of clandestinely procured raw material or clandestinely produced finished products. (v) None of the statements recorded during investigations are relevant as evidence in view of section 9D of Central Excise Act, which was not followed ; (vi) Since the Commissioner has already dropped the demand of Rs. 7,25,92,853/- he should have dropped this demand as well ; (vii) In his statement the Director Shri Singh had, in response to question 29, stated that that the capacity of the furnace is only 6 M.T. and a maximum of 6.5 M.T. of MS Ingots can be produced in a single heat. No independent verification or trial run was done and no expert opinion was obtained by the Department to es....
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....eel produced based on the number of heats is concerned, the appellant has furnaces in which steel scrap is melted and thereafter it is poured into moulds which results in production of ingots. Each batch of melting is referred to as heat. The appellant has maintained a notebook which was seized during the search. The heats are numbered serially by the appellant and in this notebook the number of heats produced is mentioned datewise along with the carbon percentage and manganese percentage etc., in respect of each batch. It is not in dispute that this notebook was seized from the appellant and as can be seen from Annexure F to the appeal each page of this notebook was stamped and signed by the appellant. This notebook, however, does not mention how much quantity was manufactured in each heat. He submits that manufacture of ingots, being a batch process, the quantity manufactured during each batch depends upon the capacity of the furnace. However, there could be small variations on account of variations in the materials etc. 8. He further points out that the ingots are also of standard size it has been explained by Shri Singh in his statement that they are of 3.5 inch X 4.5 inch - c....
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.... the notebook seized from the appellants. It is possible that the appellant was destroying the production reports and, therefore, production reports for the entire period were not available. Therefore, the demand of duty based on this production reports needs to be upheld. 12. As far as the demand of Rs. 6,12,193/- based on parallel set of invoices is concerned, learned Authorized Representative submits that the question is not of extra copy of the invoices being kept, but two invoices of the same number being generated by the appellant with different names and different quantities of goods and duty being paid only on one. While this practice may be going on for long, the demand has been made only in respect of 12 invoices which were actually recovered during investigation. Therefore, the demand on this count also needs to be upheld. 13. On the appellant's submission that since the demand of Rs. 7,25,92,853/- covering the period 01.04.2009 to 30.06.2012 has already been dropped by the Commissioner and hence these demands falling within the same period also need to be dropped, learned Authorized Representative points out that the demand was dropped on the ground that mere electric....
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.... not vary every day, but is fixed unless the capacity is altered by adding new furnaces or replacing the existing ones. Therefore, it is reasonable to presume that the capacity of one batch will be more or less consistent with that of another. However, considering the nature of the material used, namely, scrap, the size of the batch may not be as accurate as in some other industries, such as, pharmaceutical industry. 17. According to the appellant, the capacity of each batch is only 6 M.T. or a maximum of 6.5 M.T. and ingots more than this cannot be produced per heat. It is not in dispute that the production reports for the period 14.10.2012, 16.10.2012 and 17.10.2012 maintained by the appellant are its internal records recovered during search. These are enclosed as Annexure G at pages 135 to 140 of the appeal. Unlike, the notebook which only mentioned the heat numbers and the composition of the metal, these production reports give detailed timings and when the production was switched on and switched off, the time taken for processing the particular heat, the number of ingots which were produced from that heat, the length of each of the ingots in inches, the weight of the ingots p....
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....tion of runners and risers. 19. We proceed to examine how robust and consistent is the data in the production reports. We find that in each and every batch if the total length of the ingots together and the total weight is considered, the weight of the ingots per inch of length gives to 1.96 kg., as below :- Weight of MS ingots per inch of length as per the data in the production reports of the appellant Heat No. Date No. of ingots Length (inches) weight (kg) Total length of ingots in inches Weight per ingot (kg) weight (kg) per inch length of ingot (1) (2) (3) (4) (5) (6) =(3)x(4) (7) = (5)/(3) (8) =(7)/(6) 48 14-Oct-12 71 59 8210 4189 116 1.96 49 14-Oct-12 76 59 8788 4484 116 1.96 50 14-Oct-12 81 54 8573 4374 106 1.96 51 14-Oct-12 81 54 8573 4374 106 1.96 56 16-Oct-12 78 54 8255 4212 106 1.96 57 16-Oct-12 76 57 8490 4332 112 1.96 58 16-Oct-12 80 54 8476 4320 106 1.96 59 16-Oct-12 79 54 8361 4266 106 1.96 60 17-Oct-12 78 56 8561 4368 110 1.96 61 17-Oct-12 79 55 8561 4345 108 1.97 62 17-Oct-12 75 59 8673 4425 116 1.96 63 17-Oct-12 80 55 8624 4400 108 1.96 Cross sectio....
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....n raised only to the extent the notebook was recovered which shows the production. In fact, if there was excess production during past period also, but no records were recovered the demand for that period could not have been made and, hence, correctly has not been made. 23. Learned Counsel for the appellant further argued that no buyers of allegedly clandestinely cleared goods were identified by the Department and no cash was seized by the Department. 24. We find that the duty of central excise is leviable for the manufacture of the goods although it is payable on removal or at the end of the month. If there is no manufacture there cannot be any demand of duty. To the extent the manufacture was shown by the appellant in its excise returns, duty has already been paid. It is this excess manufacture which has not been reflected in the excise returns which is in dispute. This manufacture has not been determined by the Revenue out of thin air but has been worked out on the basis of the records of the appellant themselves. While the number of heats and the composition of each heat is mentioned in the notebook, the quantity produced for heat is indicated in respect of three days in a de....
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....2010 11. 485 30-08-2010 12. 496 02-09-2010 29. For each of these invoices there is another original invoice. These are discussed in paragraph 6.5 of the impugned order. For instance, invoice number 425 dated 18.08.2010 shows clearances of 28.750 MT of ingots through Vehicle No. CG 04K 7196 to M/s Alankar Alloys Pvt. Ltd., Raipur. Another invoice which exactly the same number was issued on 19.08.2010 indicating clearance of 5.1 MT of runners and risers to self in Vehicle No. CG04G 3191 similarly for each of the 12 invoices there is another invoice with the same number. 30. Learned Counsel for the appellant submits that they were extra copies of invoice and there is no bar on the assessee maintaining extra copies of invoices under central excise rules. We agree that there is no bar on maintaining extra copies of invoices, but if it be so, the invoice of the same number should, regardless of the number of copies, have the same details of the goods, value, vehicle, consignee etc. There cannot be two invoices with the same number with different dates and different quantities and with paying duty on the one and not paying duty on another. Maintaining a parallel sets of invoices i....