TMI Blog2011 (5) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... power consumption was recorded in G-7 format supplied by the Gujarat Electricity Board (GEB). However, the appellant was not showing any production or very less production on certain days in their production record viz. Daily Stock Account even though the power consumption on these days was the same or almost the same as on the days when the production was optimum. Therefore, the statement of Shri R.K. Jain, Director of the appellant, who was present in the factory at that time was recorded under Section 14 of Central Excise Act, 1944, wherein he, inter alia, stated that the number written on MS ingots manufactured in their factory comprised of heat no., month, and date and produced records pertaining to production and clearance like Daily Stock Register , Chemical Report , Gate Pass Slips, Form-IV (Raw material register) and Form G-7. On being requested for, Executive Engineer (O M), Rural Division, GEB, Bhavnagar, furnished the copies of G-7 forms in respect of the power consumed by the appellant in their Induction Furnace unit for the last 5 years. Thereafter, the searches were carried out at the office and the registered premises of the appellant in the presence of two ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortage of 40.305 MTs in the stock of MS ingots in their factory was due to a difference in considering the average weight of the ingot in range of 1 to 1.5 kg; that they did not maintain any records other than those found in their office and factory on 9-2-05. 4. On the above basis, the Revenue entertained a view that the appellant has been suppressing their actual quantum of manufacture, inasmuch as the MS ingots cleared under invoices to the customers was being accompanied by the chemical report of the ingots showing customer s name, chemical composition, heat number, number of pieces, and total weight of the ingots and average weight of ingots. Wherever, the heat number was shown on the ingots, there was no corresponding production recorded in the statutory records and the consumption of electricity was the same even on the date where no production was shown in their daily stock account and the appellants have not accounted for 1831.681 MT of MS ingots and have removed the same without payment of duty. On this ground, proceedings were initiated against the appellant alleging clandestine manufacture and removal of the goods. The notice also proposed to confirm duty in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clandestine removal is without any corroboration and therefore unsustainable in law; that no actual weighment of finished goods was carried out and number of ingots were ascertained and the same was multiplied by weight to arrive at the physical stock in the premises; that alleged shortage is very insignificant compared to their production. (e) The notice is not sustainable on the ground of limitation as they have been regularly filing monthly returns of production and removal to the department (f) The director has contested the imposition of penalty mainly on the grounds that there is no proposal for confiscation of goods and there is no proof of guilty mind on his part and has relied upon the following judgments: (i) Kamdeep Marketing Pvt. Ltd. v. CCE, Indore - 2004 (165) E.L.T. 206 (Tri.-Del.) (ii) Cipta Coated Steel Ltd. v. CCE, Aurangabad - 1999 (113) E.L.T. 490 (Tri.) 6. The Commissioner did not accept the above grounds raised by the appellant and after holding that the appellants had illegally manufactured and cleared their final product without payment of duty, confirmed the demands as proposed in the present appeal. Hence, the present appeal. 7. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, which, in turn, are based on the electricity consumption and the fact as to how much the appellant could have manufactured by using the electric units. For arriving at the above calculations, the department has not taken into consideration the fact that there may be some inferior quality production, requiring re-production, as disclosed by Shri Nitish Kumar, Production Manager, in his two statements recorded during investigation. Further, the fact of disclosing heat number in the chemical report when there was no production on that very date, also stand clarified by the Manager. In any case, we are not going into the details of such mathematical calculations, to arrive at quantum of final product, which the assessee might have manufactured inasmuch as we have already held that the same cannot be made the basis for arriving at finding of clandestine removal. 9. It is well settled law that the findings of clandestine removal are required to be arrived at on the basis of substantive and positive evidence, reflecting upon such clandestine activities of the assesee. The confirmation of demand on the basis of assessment by taking into account normal production as also the product ..... X X X X Extracts X X X X X X X X Extracts X X X X
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