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2022 (4) TMI 476 - AT - Central ExciseClandestine Removal - Ingots - alleged suppressed production - wide variation in the electricity consumption - allegation of Department is that the electricity units consumed by the appellants ranges between 1314 Units/MT to 1663 Units MT, which is much higher than the electricity consumption mentioned in the reports furnished by the expert in the field of metallurgy - burning loss - HELD THAT:- The evidences prove that there is wide variation in the consumption of electricity for the manufacture of one MT of steel ingots. There is no prescribed fixed ratio between the power consumption and the production of ingots. Therefore, the adoption of consumption norm of electricity by the department at the range of 925 Units/ 860 Units for calculating the so-called unaccounted production, is not tenable. The department in this case has linked the trading income with the clearance of alleged suppressed ingots by the appellants. For the said purpose, the adjudicating authority has relied upon the statement of the transporters to hold that the appellants had procured bogus purchase invoices and cleared excisable ingots in the garb of traded goods. In this context, the appellants have contended that the trading income relates to supply of angles, flats, channels, etc. and such trading activities were undertaken at the appellant’s Bhilai Unit and not from the appellants’ factory. On examination of case records, we also find that the transporters in their statements also stated that they had not transported MS angles, channels, flats etc., from the appellants Bhilai Unit to their buyers. Further, it is not the case of Revenue that the sale proceeds of the traded goods were not received by the appellants from their buyers. Therefore, there is no basis to allege that the amount generated in the above manner had any nexus with the sale of ingots by the appellants. Thus, there is gross violation of the principles of natural justice and as such, no negative inference can be drawn from the transporters statement relied upon by the adjudicating authority. The burning loss in this case was less than 10%, except for the year 2005-06, when the same was 11.1% and marginally in the higher side. It is a standard practice in the trade of manufacture of iron and steel that 10% burning loss is usually permissible, owing to the reason of various factors. Considering such practicality, the guidelines issued by the Ministry of Steel has also acknowledged such fact. Therefore, the issue of burning loss cannot be the standalone basis to allege suppression of production. The law is well settled that to prove clandestine removal, the department has to produce evidence of purchase of additional raw material, sale of clandestinely removed goods, mode of payment, flow back of the fund, transport report for movement of raw material and finished products etc. However, no discrepancy, whatsoever, has been found in the records of the present appellants relating to raw materials, finished goods, production, clearances, opening and closing stock, work in progress etc. Therefore, the charges levelled against the appellants that the finished goods were clandestinely manufactured and removed by the appellants are without any basis and the impugned orders passed in confirming the adjudged demands are liable to be set aside. Thus, the charges levelled against the appellants for clandestine manufacture and removal of final products, without payment of duty are not substantiated with cogent and reliable evidence. It is found that a case of this magnitude needs to be corroborated by establishing other facts such as purchase of raw material, deployment of labour, additional consumption of electricity, manufacture of final products, removal and transportation of the same to customers premises and payments received for the same - in the instant case, no other criteria has been investigated and established. The whole case is sought to be made by surmises and conjectures. The allegations of clandestine removal against the appellants do not stand judicial scrutiny. Consequently, levy of duty and imposition of penalties on the appellants are not also substantiated - Appeal allowed - decided in favor of appellant.
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