2023 (9) TMI 61

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....l scrap, which is similar to the scrap generated in their factory. A show cause notice, dated, 29.06.2011 was issued to the appellant alleging that they have violated Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and( 2) of Central Excise Rules, 2002; demanding Central Excise duty of Rs. 82,20,602/- in terms of proviso 2 Section 11A of Central Excise Act 1944 along with interest and penalty. The proposals in the show cause notice were confirmed vide Order-in-Original dated, 01.11.2012. Hence, this appeal. 2. Shri Naveen Bindal, learned Counsel for the appellants submits that the appellants have their head office located at a distance in the same city. He was conducting trading from that premises; though at times, the supp....

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.... the appellant is also at the manufacturing premises. He submits that the appellants have been disclosing all the facts to the department and therefore, invocation of the extended period and imposition of penalty is not tenable under the law. 4. Ms. Shivani, Learned Authorised Representative for the department reiterates the findings of the OIO and submits that the appellants have not intimated the department about their intention to use the manufacturing premises also for the trading purposes; they have clearly violated the provisions of Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and( 2) of Central Excise Rules, 2002 and therefore, they have rendered themselves liable to pay Central Excise duty on the scrap removed by....

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....ion of the scrap. Understandably, huge quantities of scrap, involving a duty of about Eighty Lakhs cannot be done without commensurate production of primary materials i.e. bars, rods, etc; no such discussion is seen either in the show cause notice or in the Order-in-Original. We find that not even a simple stocktaking of the raw material, finished product, the scrap generated was undertaken. On this count itself, the show cause notice is not legally sustainable. We find that Hon'ble Allahabad High Court, in the case of Continental Cement Company 2014 (309) ELT 411 (All.), observed that: 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine....