TaxTMI 
TaxTMI 
2024 (12) TMI 1531
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....ers and the returns submitted by the Noticee revealed that during the period from April, 2007 to January, 2010 (excluding the period form July, 2008 to October, 2008), the Noticee has recorded production of 42045.00 MT Sponge iron only against consumption of 97664.45 MT of Iron Ore. Thereby the average consumption for manufacture of 1 MT of Sponge Iron was 2.32 MT of Iron Ore. On scrutiny of iron ore purchase invoices pertaining to the impugned period, it was found that the Noticee had procured iron ore of Fe content in the range of 63% to 65%. 2.3 Further, it was found that the standard/average consumption of power per MT of production of Sponge Iron was 162.00 KWH. The Noticee has shown a substantially high rate of consumption of iron ore as well as power as compared to standard consumption pattern suggested in metallurgy Le around 1.67 M.T. of iron ore and 75-100 Kwh of power for manufacture of 1 M.T. of Sponge Iron. 2.4 The expert opinion obtained from leading technical consultants in the field of production of sponge iron supports the above view of the ratio of consumption to production is 1.67:1, they are as under: M/s Popuri Engineering & Consultan....
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....us, from the above, it is ascertained that ASPL has suppressed production of 16436.71 M.T. of sponge iron involving Central Excise duty of Rs. 1,83,27,914/- (including Cess) and removed the same clandestinely without payment of duty, thereby violating the provisions of Rule, 4, 6, 8, 10, 11, & 12 of Central Excise Rules, 2002 which is recoverable under Section 11A of the Act along with interest and applicable penal action under the rules. 2.9 According a Show Cause Notice was issued to the Noticee vide C.No.IV(6)2/CE/CPU/B-11/2010 dated 31.05.2012 for recovery of Central Excise duty amounting to Rs. 1,83,27,914/- along with imposition of penalty. interest and 3.0 ADJUDICATING AUTHORITY'S FINDINGS The adjudicating authority, after examining the facts on record and submission of the Noticee in this regard has made the following observations/findings vide instant O-1-O dated 10.06.2016. 3.1 The duty has been demanded in the SCN by alleging that there was clandestine production followed by clandestine removal of sponge iron. The department has relied upon the following aspects: a) The expert opinions- M/s Popuri Engineering & Consultancy....
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.... established with corroborative evidence. Simply the opinion of experts with dependence on many variables cannot be substitute for evidence of clearance established by transportation documents flow of cash etc. While deciding the issue in the case of M/s. Arya Fibres Pvt. Ltd; vs. CCE, Ahmedabad-II, reported in 2014 (311) ELT 529 (Tri-Ahmd)) has considered various orders of Tribunals and other appellate courts and arrived at the legal position regarding clandestine clearance and how they are to be established. Many other judicial decisions have also taken similar view. 3.4 Accordingly the adjudicating authority held that, the ratio laid down by various judgments makes it abundantly clear that department has to prove that firstly, there was clandestine manufacture and secondly, there was clandestine clearance to establish the demand of the duty for such an activity. Even one of these two are not established with certain degree of certainty, the demand on clandestine clearance will not withstand legal scrutiny. 3.5 Regarding excess consumption of power, CESTAT has dealt with the issue in its various orders wherein it was held that, electricity consumption could not ....
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....s to apply to industries in general. Hence the difference between standard power consumption rate of 70-100 units and actual consumption of 162 units during the material period cannot be ignored, considering the enormous quantum of energy found to have been consumed in excess without accountal during the period involved." was 84,385 M.T. in terms of which the input-output ration is derived at 1.90.1. I find that this ratio widely varies with the norms of 1.67:1 as fixed by M/s. Popuri Engineering & Consultancy Services, Hyderabad, who is a leading Technical Consultant. This is also supported by the opinion of M/s. Industrial Technical Consultant, Raipur." Accordingly the said adjudicating authority held that "I fully agree with the above reasoning adopted by the investigating officers. The department has rightly taken input output ratio 1.67:1 for calculation of production of Sponge Iron". 4.7 As regards higher consumption of electricity for corroborating suppressed production the adjudicating authority at Para 7.12 of the said order observed that: "As to how many units were consumed for production of one ton of Sponge Iron, figures have been tak....
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....dicating authority (Commissioner, Central Excise & Service Tax, Rourkela) in two similar cases based on similarly relied upon parameters. 4.10 The above view finds support from the judgment of the Hon'ble High Court of Kerala in the case of Joy Versus Regional Transport Authority reported in 1999(105)E.L.T.275(Ker.) wherein it has been held that, "Judicial discipline demands consistency in rendering judgments'. A judicial Officer may hold different views on various aspects. A judicial officer may err and pass contradictory orders inadvertently. But once it is brought to the knowledge of the Judicial Officer, he is duty bound to keep track of consistency. Inconsistent orders passed by a judicial Officer almost in the same fact situation, and that too on the same day, would give rise to complaint of discriminatory treatment, which will undermine the people's faith in the judicial system and the rule of law. It will cause resentment and anguish and make an imprint in the mind of the litigant that he has been discriminated. A judicial officer may err and pass illegal orders, but he shall not err in consistency. He should be consistent even in illegality." ....
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....nimplicable evidence. To support this contention he relied on the decision of Arya Fibres Pvt. Ltd. Vs.. CCE (2014) 311 ELT 529 (Tri-Ahmd.) and Continental Cement Company Vs. UOI (2014) 309 ELT 411 (All.). 8. He also submitted that entire demand in this case is barred by limitation as periodical EA 2000 audit was conducted for the impugned period and no objection was raised against the appellant on the basis of input/output ratio on excess consumption of electricity. Therefore, whole of the demand is barred by limitation as for the period 2007-08 to 2009-10 Show Cause Notice has been issued on 31st May, 2012. 9. Heard the parties. Considered the submissions. 10. We find that in this case the Show Cause Notice has been issued to the Respondent alleging clandestine removal of goods on two grounds a) Input/output ratio of raw materials on the finished goods. The case of the Revenue is that to manufacture 1 MT of Sponge Iron 1.67 MT of iron ore is required and to manufacture 1 MT of Sponge Iron 162 KW power is required. 11. The Ld. Adjudicating Authority has examined both the issues in the impugned order and drop the proceedings against the Respondent holding that ....
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....nt raw materials/consumable viz., Coal & dolomite. In the entire investigation, the Department has not brought out any evidence towards excess procurement of coal and dolomites. Since the coal is bought from the coal mine, proper records were kept both by the vendor as well as by the receiver. Such huge quantity of coal could not have been bought by way of cash. There is also no evidence towards deployment and movement of hundreds of vehicles to transport such huge quantity of coal and dolomite. Further, it is seen that no investigation has been taken up towards alleged sale of the huge quantity of Sponge Iron. No statements have recorded from any of the alleged purchasers of the finished goods. There is no allegation about recovery of any private records towards cash receipt/cash payment for the alleged clandestine transactions. In case of allegations of clandestine manufacture/sales, it is essential for the Department to bring in as much corroborative evidence as possible. In this case, it is seen that the Department has solely relied on the consumption of iron ore which is only one of the raw materials to arrive at the estimated production quantity. Even the Fe (T) content of ir....
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....under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 6. Section 90 of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.&K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.) = 2011 (22) S.TR. 225 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. 7. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 90 is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. As already noticed herein above, sub-section (1) of Section 90 sets out the circumstances in which a statement, made and signed before a Gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for t....
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....the Tribunal has held as under- 6.1 Further the department has not gone beyond the approximation of yield which they have shown as 70 to 84% in col. 3 of Annexure-A attached to the show cause notice and average yield overall had been shown as 77.60% which has been made the basis for issuance of the show cause notice (SCN) as well as for confirming the duty of Central Excise by the impugned order dated 19-5-2009. The department confirmed the duty demand along with interest for the period of five years alleging suppression of clandestine removal of the final product and also imposed penalty mainly based on the production approximation and on the statement of Director of the unit, Shri Agarwal, who is one of the appellants in this case. 6.2 The department has not gone beyond the approximation and the statement of Shri Agarwal. Any prudent person would not so conclude on extra production by approximation and by a mere statement of the Director of the company. Unless there are further corroborations in the form of documentary evidences, which could be like despatch details for the production, receipt details of the said material, transactions of the sale money, transpo....
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.... appellants. Further, we find that mere single seizure of 449 kgs of acid slurry valued Rs. 16000/- during the transit cannot be a proof for the Revenue to arrive conclusion that the huge quantity of Acid slurry was manufactured and cleared clandestinely. The seizure of acid slurry found at M/s. Baby Star Soap Works, cannot be expanded to the total quantity of 1366.686 M.Ts alleged to have been manufactured by the appellants clandestinely 15. Further, we find that the adjudicating authority has computed the quantity and value purely on mathematical formula and worked out the total quantity of acid slurry by adopting the ratio of raw materiais LAB and sulphuric acid purely based on the alleged quantity of LAB received by the appellants from SWC and not supported with any evidence. As regards the payments made to three employees of SWC, the appellants claimed that this was paid for the expenses. Regarding payment of Rs. 11 lakhs made by Fintex Chemicals to TNPL, we find that there is no finding to link the said payments to supply of LAB to the appellants and mere statements that they are related and controlled by the appellants, is not an evidence to hold that appellants rev....
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....ed man- made fabrics from the appellant's factory or any instance where clandestinely removed goods were seized by the revenue. Cross-examination of the third party witness was also not provided to the appellants. 8. Similarly, in the matter of Nova Petrochemicals v. CCE, Ahmedabad-II, this Tribunal in its Final Order Nos. A/11207-11219/2013, dated 26-9-2013 this bench has held as under in Para 40: "After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenues which mainly are the following: (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions, (ii) Evidence in support thereof should be of: (a) raw materials, in excess of that contained as per the statutory records, (b) Instances of actual removal of unaccounted finished goods (not inferential or assumed) from factory without payment o....
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....re furnishing the returns and paying the central excise duties. The Superintendent issued the show cause notices dated 1-12-2006 asking the respondent to show cause why the demand towards central excise duty may not be confirmed for the period from 2001-02 to 2004-05 by invoking the proviso to Section 11A(1) of the Act and why the penalty should not be imposed under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11AC of the Act. Various allegations have been made in the show cause notices and from the perusal of the show cause notices it appears that the excess production has been estimated on the basis of the higher electricity consumption. The respondents filed their reply. The Commissioner of Central Excise, Meerut-1, vide its order dated 30- 7-2007 has confirmed the demand against the respondent nos. 1 and 2 and also imposed the penalty on the respondent nos. 1 and 2 and on other respondents alleged to have been involved in the clandestine removal of the goods. 5. On consideration of the aforesaid findings, we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perv....