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TMI Blog2013 (9) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants were Mild Steel items. They were taking credit of such duty paid on material used as inputs in their manufacturing process. 3. On 20.12.02, the Central Excise officers visited the premises of the appellants and conducted a verification of inputs lying in stock as against inputs received in the factory as per their records. The officers assessed a shortage of 52,26,797 kgs of raw materials and made out a case that the appellants had taken Cenvat credit amounting to Rs.1,69,51,548/- (as detailed in para 4 of SCN), on such quantity of inputs and cleared the goods without payment of duty. 4. The SCN also gave another calculation of shortage in para 12 of the SCN based on opening stock of materials as on 01-04-2000 and taking into account receipts of raw materials and clearance of final products after that. Thus calculation indicated a shortage of 29,37,295 Kgs of raw material. It appears that this calculation is given as a fallback position. But it was not mentioned so explicitly. It is seen that the demand for duty made in the SCN was for shortage of 52,26,797 kgs. that is based on statements given to the bank 5. After due process of reply and personal hearing duty deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al stock available in the factory. They also submitted that the shortages have been arrived at considering only supplies made to 3 customers namely BHEL, VATECH AND EMCO. They submit that there were many other customers to whom appellants had cleared finished goods and such goods have not been taken into account which has resulted in the conclusion in the impugned order. 9. They pointed out the following arguments in respect of shortage of 29,37,245 kgs of MS inputs:- (a) There are totally mistakes in the Annexure E-1 and E-3 to SCN depicting Appellant's clearance to BHEL, Further the list of supplies to BHEL is not complete. (b) In computing the alleged shortage of 29,40,736 kgs of input steel, vide para 12 of the SCN, the output to BHEL (Sl No.3 (a) of the table) the figure has been wrongly taken as 11,79,243 on account of a totaling mistake in annex E-1 to SCN. The correct total of Annex E-1 to SCN is 24,16,659 kgs, however 5,31,778 kgs pertained to previous year, as such only 18,84,881 kgs pertained to 2000-2001. The Annexure E-1, E-2 and E-3 to SCN have been computer printed and the weights of finished goods supplies for the year 2000-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a corroborative factor. Hence in the reply it was adequate to demolish the reliability of such evidence by exhibiting its qualitative weakness and unreliability, hence the question of quantitative and complete rebuttal of the ground newly found in the 0-I-0, beyond the scope of SCN, did not arise. 10. The appellants have also a case that the quantum of demand has been wrongly worked out because of the wrong figures arrived for cost of input material namely steel. In this context, they make the following submissions:- * The demand in rupees has been inflated in 0-I-0 on account of taking a very wrong average figure of the cost of input material - Mild steel. * In the SCN (and O-I-O) while working out the average price of steel and consequently the credit in rupees per kg of Steel vide (para 6 of SCN) average of only seven invoices has been taken. Out of seven, five invoices pertained to Appellant's own purchased steel for which the average price was Rs. 15 per kg whereas the balance two invoices constituting 2 kgs of total 7 kg i.e. more than 25% pertained to BHEL's free issued material. Apparently the cost of BHEL's free issued material w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y year in their balance sheet which was totally unsustainable and does not reflect in their financial operation. As pointed out in appellant's reply to SCN vide para 9, the value addition of appellant (being a sub-contractor of steel fabrication work, without their own designs/brand technical know-how) is around 47.9% which is normal for fabrication industry. However, if 29,40,736 kgs of input steel stood withdrawn from appellant's operation during the SCN period the value addition would jump to around 256% which is totally absurd and un-imaginable for a fabrication industry without any of their own design, technical knowhow or brand name. 12. The appellants also point out that similar show cause notice dated 21-06-05 issued to their Unit No. II in the jurisdiction of the same Commissionerate was dropped by the adjudicating officer in that case, vide order dated 18-12-05. 13. The Ld. A.R. submits that all the annexures that the appellants have now given before the Tribunal was not given to the adjudicating authority and hence are unverified evidence and hence cannot be relied upon. The stock of material as on the date of verification was agreed to by the appellant. Such stock was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issues like not taking into account the material lying as work-in-progress, material sent by them for job work etc. The argument that such material was never pointed out during stock taking is not a valid objection from Revenue because at the time of stock taking the reason for stock taking was not explained so that the appellants could point out errors due to such omissions. It is also not clear why the opening balance for the year 2000-01 is taken from balance sheet and thereafter the balance sheet figures of closing balance for that year and OB and CB for subsequent years are not taken note of and efforts made to point out discrepancies. The portion of work sheet showing clearances for 2000-2001 in Annexure E-1 does not show page-wise sub totals. The work sheet is split into different parts with new serial number 1 starting again and again. Even for such sub-sections, sub totals are not put. So verification regarding the claim of mistake in totaling was very difficult. But we have found that the figures for the year 2000-2001 in Annexure E-1 was much more than the clearance shown in para 12 of the show cause notice for the year 2000-2001. On the whole the entire calculation gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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