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TMI Blog2009 (7) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... . As far as the Director is concerned, in the order dated 12-3-09, he has been subjected to penalty of Rs. 25 lakhs whereas under the order dated 3-3-09 the penalty of Rs. 10 lakh has been imposed upon the Director. The order dated 12-3-09 relates to the period from May, 2003 to September, 2006 and the order dated 3-3-09 relates to the period from April, 2003 to September, 2006. In the former case, a show cause notice was issued on 19-5-2008 whereas in the later case it was issued on 31-3-2008. 2. The orders are sought to be challenged basically on the ground that the findings arrived at by the authorities are not based on tangible evidence and the case put forth against the appellants has not been supported by corroborative piece of evidence. It is also challenged on the ground that for the period of nearly one and a half year from furnishing of materials asked for, no action was taken and hence, there was no cause for invoking extended period of limitation. Grievance is also being made regarding non-furnishing of documents in relation to action initiated against M/s. Shree Sharma Steel Rolling Mills (P) Ltd. and Nirmal Inductomelt Pvt. Ltd. though those proceedings were the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erits of the case is limited to find out the prima facie case, if made out, by the appellant for grant of waiver in relation to pre-deposit in terms of Section 35F the Central Excise Act, 1944. Bearing the same in mind, if one peruses the impugned order the same discloses findings regarding duty liability of the appellants based upon the analysis of all materials on record. Being so, the contention regarding absence of corroborative piece of evidence is totally devoid of substance. If the authority has refused to give much credence to the documents produced by the appellants in comparison to other materials placed on record by the department, it cannot be said that documentary evidence produced by the appellants has been totally discarded by the adjudicating authority while arriving at the find relating to duty liability of the appellants. 6. The accusation against the appellants was in relation to clandestine manufacture of goods and removal thereof with intention to evade the duty and the same is sought to be made good primarily referring to the materials pertaining to the consumption of electricity which is absolutely necessary required for production of the goods, support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the normal production unless all the factors mentioned are present simultaneously". The Apex Court was referring to Rule 173E of the Central Excise Rules which reads thus: "Rule 173-E. Determination of normal production. - Any Officer duly empowered by the Collector in this behalf may fix the quantum and period of time when the production in the assessee's factory was considered normal by such officer having regard to the installed capacity of the factory, raw material utilisation, labour employed, power consumed and such other relevant factors as he may deem appropriate. The normal quantum of production during a given time so determined by such officer shall form the norm. The assessee shall, if so required by the said officer, be called upon to explain any shortfall in production during any time as compared to the norm. If the shortfall is not accounted for to the satisfaction of the said officer, he may assess the duty due thereon to the best of his judgment, after giving the assessee a reasonable opportunity of being heard." It is thus clear that once the quantum of production can be ascertained on the basis of electricity consumption by the factory the variation of the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such a wide variation in units per MT. All these factors taken together, the authorities have arrived at the finding of duty liability of the appellant. We do not find any prima facie case being made out in support of the contention that the findings are not based on tangible evidence. 12. The decision of the Apex Court in Oudh Sugar Mills case was in the peculiar facts of the said case. Therein, it was in relation to the production of sugar and calculation in that regard was purely based on some assumption. The Apex Court after noting the process involved in the production of sugar clearly held that, "the entire operation is thus carried out in a closed system and quantity of the sugar as well as of the by-products is known. The percentage of sugar in sugarcane, mixed juice, filter cake and molasses is determined. In spite of this, a certain amount of sugar remains undetermined," while recording the contention on behalf of the assessee that it cannot be held guilty of short accounting of sugar unless it was established that any part of the sugar manufactured in the factory had been removed from the factory or there were some loopholes in the working of the factory which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories for devising the norms of consumption of electricity for production of steel ingots. It was basic philosophy in the taxation matters that no tax can be levied on the basis of estimation. In that case, there was added problem in the sense that estimation of production fluctuates widely depending upon the fact as to which report has to be adopted. It was clearly observed that" unless the manufacture of the steel ingots is proved to the hilt by authentic, reliable and credible evidence, duty cannot be demanded on the basis of hypothesis and theoretical calculations, without taking into consideration the ground realities of the functioning of the factories. High consumption of electricity by itself cannot be the ground to infer that the factories were engaged in suppression of production of steel ingots." 14. In the background of these facts, the Tribunal held that "the law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate fairly conceded that it would not be proper for the appellants to rely upon those decisions in the stay application and submitted that the appellants do not want to rely upon any of those decisions in support of their contentions. 17. In Chola Spinning Mills (P) Ltd. case, the Tribunal held that duty liability cannot be fixed solely on the basis of third party's records without any corroboration of such records. There can hardly be dispute on this proposition of law. As already seen above that the duty liability of the appellant has not been fixed on the basis of records in relation to proceedings pertaining to Nirmal Inductomelt Pvt. Ltd. or merely on the basis of production rate of M/s. Shree Sharma Steel Rolling Mills (P) Ltd. Undoubtedly, these facts have been taken into consideration for initiating the proceedings against the appellants. However, the ultimate findings which have been arrived at are essentially on the basis of investigation carried out in relation to production of the goods in the appellants factory and the same is not solely on the basis of any observation made in relation to the case of M/s. Nirmal Inductomelt Pvt. Ltd. or solely on the basis of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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