AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 994
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.... case are that the appellant is engaged in manufacture of scented betel nuts, which is known as meethi supari, and is registered with the Central Excise Department. In the process of manufacture of scented betel nuts, raw material betel nuts is procured and then it is cut into small size by cutting machine. Thereafter, the cut betel nuts are processed in sieving machine, then it is soaked in water overnight in terrace. The soaked betel nuts is dried and mixed with liquid sugar and kept on terrace for 2 days. The prepared finished product is packed in pouches and sold in the market in bulk packages. 3. On 22 and 23.12.2017, the factory and residential premises of Shri Jugal Kishore Agarwal were searched by officials of DGCI and it was fou....
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....oval of goods. 5. The matter was contested by the appellant but the Adjudicating Authority confirmed the demand proposed in the show cause notice. The said order was challenged before the learned Commissioner (Appeals). The matter was remanded again to the Adjudicating Authority vide order dated 16.04.2021, wherein the learned Commissioner (Appeals) directed the Adjudicating Authority to conduct necessary enquiry regarding the correctness of allegations made by the appellant and thereafter pass a speaking order. Again, in the remand proceedings, the Adjudicating Authority confirmed the demand holding that the appellant has not produced proper stock records and the allegation of excess and shortage of stock is not acceptable. The demand o....
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....nciples of natural justice. Therefore, it is prayed that the demand of duty is not sustainable and consequently penalties on the appellant are not imposable. 7. On the other hand, the learned Authorised Representative for the Department relied upon the impugned orders and submitted that the demand was not solely based on electricity consumption but also supported by unaccounted raw materials and evidence of clandestine removal, which was further accepted by the Director of the company, who agreed to voluntarily pay Rs. 50 lakhs. Therefore, the appeals are liable to be dismissed. 8. Heard the parties, considered the submissions and gone through the records. I find that the demand has been raised mainly on the basis of electricity consu....
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....he period when monthly returns were filed, the quantity of supari produced per unit was reckoned. Therefore, in Annexure A to the SCN which gives the calculation, there are quarterly ratios upto April 2017 and monthly ratios from May 2017 to November 2017. 22. These ratios (i.e., the quantity of scented supari in kg produced per unit of electricity consumed) varied widely from a mere 2.522 kg per unit (during the quarter June 2015 to September 2015) to 8.448 kg per unit (during the period 1 November to 9 November 2017). The SCN calculated these ratios in Annexure A. 23. In Annexure B of the SCN, the amount of duty short paid was calculated applying the highest production per unit (during the period 1 November 2017 to 9 Nov....
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.... and part of the supari so produced was clandestinely removed without paying duty. In COMMISSIONER OF C. EX., MEERUT-I Versus R.A. CASTINGS PVT. LTD. [2011 (269) E.L.T. 337 (All.)] the Allahabad High Court set aside a similar demand of duty alleging clandestine removal of ingots merely based on electricity consumption. Relevant portions of this judgment are reproduced below: 3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, The Tribunal observed that it is settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E ....
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....nding that since the incriminating statements of share brokers etc. have been relied upon in the proceedings, it was incumbent upon the Revenue to produce them as well as the investigating officer for cross-examination by the appellants, as was repeatedly requested by them. In the absence of the same, the statements of the share brokers etc. cannot be relied upon. The Tribunal further observed that even if, for the sake of argument, it is accepted that the income shown in the balance sheets is not the income derived form the sources declared by the appellants, there is nothing on record to link it with the so called clandestine removal of the goods. 5. On consideration of the aforesaid findings, we are of the view that the findings....