TMI Blog1991 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and charge chrome slag was 10642.980 M.T. It is the case of the department that on scrutiny of records of another 100% E.O.U. manufacturing charge chrome in the same Collectorate s jurisdiction, it was found that the ratio of charge chrome to slag was 1:1. Thus the case of the department is that when the total production of charge chrome and charge chrome slag by the appellants was 10642.980, then based on the ratio of 1:1 the production of charge chrome should have been shown as 5321.490 M.T. which is just half of the total production. The allegation of the department is that the appellants have thus suppressed the production of 1007.30 M.T. (5321.490 - 4313.560) of charge chrome valued at Rs. 1,14,90,402.00. The value and duty of the charge chrome slag were determined at Rs. 1,14,90,402.00 and Rs. 1,52,93,725.06 respectively as per the calculation made by the department. 3. It is further alleged by the department that the stock taking revealed that 3721.140 M.Ts. of charge chrome slag have not been accounted for in 100% EOU premises. Accordingly, the samples of charge chrome slag generated from 100% EOU were sent for test. The test report of the Chemical Examiner of the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forthcoming, a second writ petition being OJC/857/1985 was filed by the appellants before Hon ble Orissa High Court, inter alia for giving direction to the Collector for furnishing various information sought by the appellants and to send the sample for retesting and to arrange a joint survey to find out the slag lying in various areas. The Hon ble High Court disposed of this Writ Petition by their order dated 30-4-1985 by directing, that the appellants may be given a fortnight s time to file their reply after a copy of the retest report is furnished to them. 7. The appellants thereafter by their letter dated 5-6-1985 requested the Collector of Central Excise to supply in addition to the retest report and as per direction of Hon ble High Court, to disclose - (i) the basis of the alleged established/accepted norm of ratio of charge chrome to slag as 1:1; (ii) to disclose the name of the other 100% EOU from whose records the ratio of charge chrome to slag is ascertained at 1:1; (iii) to verify the allegation of sales of charge chrome slag vide Invoice No. 22/25, dated 28-9-1984 and (iv) to cause a joint survey to ascertain the quantity of slag lying in various areas inside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, dropped the other charge of unauthorised and surreptitious removal of 3721.140 M.T. of charge chrome slag. 9. Being aggrieved by the abovesaid adjudication order, the present appeal is filed. The learned Advocate Shri B.K. Mohanty made the following submissions in this regard : 10. The show cause notice as well as the subsequent proceedings and the adjudication order passed by the Collector are without jurisdiction and are hit by the principles of res judicata. He pointed out that the Honourable High Court passed the order dated 30-4-1985 in OJC 857/85 and quashed all the show cause notices. When the matter was taken up before the Hon ble Supreme Court, it was directed by the Supreme Court that if so advised, the Collector should move the High Court for appropriate directions in proceeding in this matter. It was, therefore, contended that the issue of the subject show cause notice dated 18-10-1984 is violative of the abovesaid order passed by the Hon ble High Court in OJC No. 1545/84. He, therefore, drew our attention to Order No. 1977/81-C, dated 21-9-1987 of CEGAT relating to show cause notice No. C-VIII/20-CUS/EOU/SBP/84, dated 18-10-1984 and the order of the Hon ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case. Shri Mohanty also contended that the learned adjudicating authority failed to take note that inferior ore was mostly used by the appellant which resulted in the generation of higher percentage of slag during the relevant period and also the appellants plant having been commissioned on trial run, during March 1983, production was not stabilised and consequently generation of waste and slag was found to be higher in the initial period of operation. The statements made by the officials of the appellant company in this regard was not considered by the adjudicating authority. It was also mentioned during the course of arguments that the learned Collector erred in holding that the volumetric stock taking was binding on the appellants. It was pointed out that this volumetric stock-taking has got its inherent shortcomings and the appellant had explained that the shortages found, if any, in volumetric stock-taking are not accurate. 12. Shri Mohanty, therefore, contended that the learned Collector was wrong in holding that the appellants had suppressed production of 313.823 M.T. of charge chrome and surreptitiously removed the same. It was his submission that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-4-1985 the appellants had already obtained directions of the Hon ble High Court of Orissa to proceed in the abovesaid matter. In that view it was argued before us that the present proceedings are not hit by the principles of res judicata. With respect to the fact of confirmation of demand of duty on the ground that the appellant had clandestinely removed 313.823 M.Ts. of charge chrome it was submitted that the appellants vide their letter No. ED/SC/28, dated 8-8-1988 stated that they have seen the Paper published by the Officials of FACOR at the Fourth International Ferro Alloys Congress held at Rio De Janerio where the operational data of their plant is given, showing slag volume between 1.20 to 1.30 per tonne of charge chrome. It was his submission that this is a document which was produced by the appellant and the learned adjudicating authority has relied on that document itself to come to the conclusion that the appellant had produced charge chrome slag at the ratio of 1:1.30. Shri Biswas also pointed out from the impugned order that the learned Collector had verified the submissions of the appellants that the ratio of prime metal to slag in the other 100% of EOU i.e. O.M.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arise. It was also contended that since the department had withdrawn all the seven show cause notices the Hon ble High Court dismissed the Writ Petition filed by the appellant as infructuous. It was also pointed out that the Tribunal in Order No. 917/87-C, dated 21-9-1987 had held that no proceedings in terms of the show cause notice C. No. VIII (20)/Cus/ EOU/SBP/84 Pt. 11/2175, dated 18-10-1984 is maintainable and that matter was taken up before the Hon ble Supreme Court in Civil Appeal No. 2113 of 1988, dated 16th September, 1988 and the Hon ble Supreme Court dismissed the appeal with an observation that the Central Excise Customs Authorities can move the High Court for taking appropriate directions if so advised. It was, therefore, contended that without moving the High Court in the matter and taking such permission, the passing of the impugned order is not in accordance with the law. 16. In order to appreciate the contentions of the learned Advocate, it is necessary for us to quote the orders passed by the Hon ble High Court of Orissa in OJC No. 1549/84, dated 4-7-1984. The material portion of the order reads as follows :- Learned Standing Counsel, Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court had given an option to the department to move the Hon ble High Court for taking appropriate direction in the abovesaid matter if so advised. In fact, the order of the Supreme Court constitutes a liberty to the department to move the Hon ble High Court in this regard for taking further action in the above matter. That being so, the department was permitted to proceed in this direction if the department takes permission to that effect from the Hon ble High Court. 22. But before the orders of the Hon ble Supreme Court dated 16th September, 1988, the appellant had moved the Hon ble High Court of Orissa in OJC No. 857 of 1985. In that case the department was proceeding against the appellant in terms of the show cause notice which is the subject matter of the impugned order. After hearing the appellant as well as the department, the Hon ble High Court passed an order dated 30-4-1985 in the abovesaid case. The above order reads as follows :- Order No. 3 dated 30-4-1985 Heard. Admit. The learned Standing Counsel for the Central Government enters appearance on behalf of all the opposite parties. With the consent of the learned Counsel for both parties, the matter is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court the department had obtained the permission of the Hon ble High Court of Orissa to proceed with the matter subject to the condition that they should furnish a copy of the retest report to the appellants and the appellants should furnish their reply within fortnight from the date of receipt of that report. That being so, in essence and substance the directions of the Hon ble Supreme Court were complied with in this case and in terms of that order when the retest report was furnished to the appellant, the learned Collector was within his right to adjudicate the present case. In such circumstances, we are unable to accept the contentions of the learned Advocate Shri Mohanty that the present proceedings are barred by the principles of res judicata. We hold that in view of the decision of the Hon ble High Court of Orissa passed in OJC 857 of 1985 dated 30-4-1985, the present adjudication proceedings are maintainable and they are not hit by the principles of res judicata. Point No. (i) is decided accordingly. 24. Point No. (ii) : As far as the second point is concerned, it was the contention of the learned Advocate Shri Mohanty that the appellants have cited before the adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material and composition and constituents of chrome ore, fluxing material, reductants, nature of furnace and supply of continuous power, quality of finished product etc. The learned adjudicating Officer also did not dispute this contention of the appellant seriously. This will be evident from the impugned order. It was also contended by the appellants before the learned Collector that the appellants were using inferior ore which resulted in generation of higher percentage of slag during the relevant period and during trial run production was not stabilised and generation of waste and slag was bound to be higher in the initial period of operation. Shri Mohanty also pointed out that the statements obtained on oath from various officials of the appellant company had explained the process of generation of slag which will support the contentions of the appellants. It should be noted that the production of charge chrome slag will depend upon various factors as mentioned above and there cannot be any fixed formula in this regard. In a case where the department alleges clandestine removal of charge chrome slag, it is for the department to prove the case on reliable materials and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meter is inconveniently placed is no ground against carrying on the experiment. It is pointed out to us that in like cases the Tribunal itself had set aside the assessments in view of the wide disparity in electricity consumption from mill to mill for the required quantity of oil yield. Be that what it may, it is plain knowing it for certain, that the turnover depends on various factors and circumstances peculiar to the rotaries concerned, the taxing authority rested their conclusions on the tests carried out in other rotaries. The basis furnished by tests conducted in other undertakings cannot be of much relevance for the purpose of these mills about which it cannot be said that they are similarly circumstanced in all respects. As the data relied upon by the assessing authorities, which is made the basis of best judgment assessment, thus smacks of arbitrariness, the best judgment assessment is liable to be set aside. 30. Applying the above principle to the facts of this case, it is clear that the turnover of charge chrome depends on various factors and circumstances peculiar to each of the factories concerned. The formula furnished by FACOR cannot be of much relevance for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect or unreliable. It sometimes happens that current supply falls far below the usual voltage and on such occasions the output will necessarily be much lower than the normal rate. The efficiency of the crushing machine as also the moisture content in the copra would also be relevant factors to be taken into account in arriving at the output. It is, therefore, unsafe to uphold the rejection of the accounts purely on the ground that there has been divergence in the consumption of electricity. In this case, there is also the additional circumstance that the department itself has admitted variations ranging from 10 to 12 units per quintal; and the petitioner s consumption of electricity is 12 units per quintal, which cannot be said to be wide off the accepted consumption. We are of the opinion that in these circumstances the rejection of the accounts is not legally justified. 34. Applying the principles laid down in the abovesaid decision, it can be said that the production of charge chrome slag will depend upon special circumstances like the continuous source of electric supply as well as the nature of the ore etc. and it is unsafe to rely on the ratio of another organisation to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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