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2016 (9) TMI 228 - AT - Central ExciseDemand and imposition of penalty - clandestine removal of goods - each B.P Sets is used for each heat, thus the number of B.P.sets used in a day reveals the number of heats materialized - suppression of 5435.934 MT of M.S. Ingots - wherever information of B.P. sets is not available in Daily store report, the data of issue of silico magnese and Ferro Silicon available in the issue register has been considered for calculation of heat materialised and from these figures, the production suppressed was of 380.980 MT. Held that:- though the said documents were seized from the factory of the Appellant, but no efforts were undertaken to check the veracity of the said documents. None of the documents seized from the premises has been investigated to know the author/ person who had prepared such documents. The Ld. Counsel for the Appellant has pointed out that even Shri Ketki in his statement had stated that the capacity of the furnace is 6 MT. In that case, the log sheet appears to be contrary to his statement and if the department had any doubt, they should have conducted practical test of the heat. No actual practical test was conducted to ascertain the capacity of the furnace which was the easiest thing to do. Further, the purchase invoices clearly show that the capacity of furnace is 6 MT each. We therefore, find that there is no force in the allegation that the capacity of furnace is 7.9.MT. Even the capacity of the furnace cannot be a criteria to allege clandestine removal. The excess or unaccounted consumption of raw material together with its production, removal and transportation has to be shown to substantiate the charges of clandestine removal. We find that the allegation of suppressed production is based merely upon use of B.P. Sets considering that one B.P. Set is used for one heat and thus the number of B.P. Sets means the number of heat materialized. We are not inclined to accept this logic made by the revenue for the reason that the consumption of consumables cannot be a criteria to determine the production of goods. It would be more farfetched imagination to assume that only on the basis of use of consumables, which is a refractory material in multiple piece and prone to breakages/ defect, can be ground to allege clandestine production and clearance of goods. Further no practical test of its use has been carried out. In this case, reliance has been placed on use of Ferro Silicon and Silicon Maganese, we find that it is used in very small percentage and the use depends upon the composition of major raw materials, and therefore, the number of times it was issued for production cannot be considered as equal to number of times the heat were materialized. In case of M. VEERABADHRAN Vs. CCE EXCISE, CHENNAI-II [2004 (10) TMI 488 - CESTAT, CHENNAI] as upheld in COMMISSIONER Vs. M. VEERBADHRAN [2005 (12) TMI 574 - SUPREME COURT], the demand based on formula was set aside and we find that the judgment is applicable in the present case. Further, the most important aspect for alleging clandestine removal is that there has to be extra consumption of major raw material which are Sponge Iron and Pig Iron and their production. Even there is no evidence of a single consignment cleared from the Appellant's unit without payment of duty. No buyer or transporter of alleged suppressed production has been brought on record. Nor any evidence in the form of receipt of consideration has been brought on record. We agree with the submissions and various judgments cited by the Appellant and hold that the demand on the basis of log sheet or use of B.P. Sets or Ferro Maganeese and Silicomn Magnese are not sustainable. Our view is also based upon the fact appearing in the show cause notice that at the time of visit to the factory of the Appellant, no discrepancy in stock of raw material and finished goods was found which could indicate any clandestine removal of goods. We accept the contention of Appellant that no practical test was conducted to ascertain the actual consumption coupled with fact that the consumption of electricity is not the criteria to allege clandestine removal. Moreover, it is not knows as to from where the consumption of 911 units and industry average of 850 MT has been derived. In the case of CCE, MEERUT-I Versus R.A. CASTINGS PVT. LTD. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT] as upheld in COMMISSIONER Vs. R.A. CASTINGS PVT. LTD. [2011 (1) TMI 1302 - Supreme Court of India], SAVITRI CONCAST LTD. Versus CCE, JAIPUR [2015 (11) TMI 1032 - CESTAT NEW DELHI] cited by the Appellant, it has been held that the consumption of electricity cannot be a ground to uphold allegation of clandestine removal. We therefore, hold that the said alleged consumption of electricity can not be the defensible ground to allege clandestine removal of goods. The revenue has also relied upon certain investment made in the Appellant's Unit in the year 2003 on the ground that the same pertains to amount of clandestine clearances made by the Appellant. We find from the appeal memo that such investments were properly explained and pertain to subscription of shares in Appellant's company. In such a case, there is no reason to link said amount with clandestine clearances. Even assuming to be so, we find that the investment pertains to the year 2003, whereas in the present case, the period involved is 2005. Thus, there is no reason to hold that the said investments support the allegation of the revenue. Therefore, the demand against M/s Balajee Structural, is not maintainable and the impugned order is set aside. Also as there is no sustainable demand, consequential penalties on Shri Jaiprakash Agarwal, Commercial Executive is also set aside. - Decided in favour of appellant with consequential relief
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