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2014 (8) TMI 660 - AT - Central ExciseClandestine manufacture and removal of Ingots without payment of duty - Allegation on the basis of electricity consumption - Revenue contends that manufacturing units are showing more electricity consumption for production per MT of MS ingots - Reliability on the case of R.A. Castings Put Ltd vs CCB reported in [2008 (6) TMI 197 - CESTAT NEW DELHI] - Difference of opinion - Matter referred to larger bench - Majority order - Held that:- it is evident that the demand alleging clandestine removal and suppression has been made mainly on the basis of the report of Dr. Batra, in preference to other available reports produced by the appellants which show higher consumption of electricity. Even the actual consumption found by the department on physical verification in the unit of the appellant was more than the highest reported by Dr. Batra. The raw material consumed as per findings of Commissioner comprised about 90% of Sponge Iron, which could have increased the power consumption as per available reports. Admittedly, the power consumption could have carried for various reasons which were placed before the Commissioner, and it was also contended that there was no evidence adduced for alleged clandestine removal. The various circumstances narrated in the impugned order however created doubt in the mind of the Commissioner. No incriminating statement recorded in the instant case has been brought to my notice by the department. In the matter of SRJ Peety, on being asked to clarify on higher consumption of electricity than in Dr. Batra's report, in his statement dated 03.05.2008, Shri. S.S. Peety gave many reasons such as unscheduled shut downs in supply of electricity and furnace, unskilled labour, furnace efficiency, model of furnace, units required in burning loss of inputs, power voltage fluctuation, inferior quality of scrap, tripping of electricity supply, power transmission losses, decrease in efficiency of plant and machinery and consumption of roughly 20% power in Auxiliary Load. He has not accepted the allegation of clandestine removal in his statement. Commissioner is not relying on the same and the findings of the Commissioner, as recorded earlier, have not been challenged by the Revenue. All these other allegations were also levelled in R.A. Casting (supra). It was further observed in R.A. Casting (supra) that it would be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for future. None of the so called other evidences referred in the impugned Orders prove clandestine clearance. The primary evidence of department is admittedly excess electricity consumption based on benchmark adopted allegedly from report of Dr. Batra, which was already held to be arbitrary by Hon'ble Tribunal in RA Casting (supra). Thus, in my opinion the primary evidence relied in the impugned Order is itself inadmissible, and no other evidence in the instant case proves clandestine production and clearance to sustain the demand. It is contended by Revenue that furnaces installed in the factory of present appellants were in sound condition as compared to R.A. Casting (supra), however I neither could find any material in support of this argument, nor any such finding in the Orders impugned in the appeals. There can be no dispute on the fact that in adjudication proceedings, the charge of clandestine removal is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumption and assumptions. Regarding the claim of the Revenue that subsequent to passing of impugned Orders the power consumption for manufacturing one MT of Ingots has reduced in factories of all the appellants, I am of the view that it cannot be a basis to sustain the findings in the impugned Orders by assuming that there could not be any reason for lower consumption of electricity during the subsequent period. I also agree with the finding of the Hon'ble Vice President that in any event, this additional material is also only of power consumption. Further, in Sarvana Alloys Steels Pvt. Ltd. [2011 (2) TMI 1211 - CESTAT, BANGALORE] similar order based on power consumption was held unsustainable and the appeal was allowed after considering inter alia the judgments in D. Bhoormull (1974 (4) TMI 33 - SUPREME COURT OF INDIA), Gulabchand Silk Mills (2005 (3) TMI 192 - CESTAT, BANGALORE), as also Hans Casting (1998 (3) TMI 298 - CEGAT, NEW DELHI). In A.K. Alloys, [2011 (10) TMI 427 - CESTAT, NEW DELHI] the Tribunal followed the decision of R.A. Casting (supra) and allowed the appeal, as the demand was based mainly on the evidence of power consumption without any evidence of clandestine removal - judgment in R.A. Casting (supra) would be squarely applicable in the facts of the instant case in all the appeals - Decided in favour of assessee.
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