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M/s. RM Brothers (Pvt.) Ltd., Sh. Ashish Jindal, M/s Jagadamba Ispat (A Unit of Piyush Finhold (P) Ltd.) , Sh. Bhanwar Lal Gupta, M/s Amar Pratap Steels (P) Ltd., Sh. Gurmukh Singh, Director Versus CCE Jaipur-I

2015 (4) TMI 734 - CESTAT NEW DELHI

Clandestine manufacture and clearance of goods - Penalty u/s 11AC - Held that:- As regards the private ledger account recovered from SSSRM which contained entries regarding supply of MS Ingots by the appellants to them, these accounts being third Party documents could be used against the appellants, only if, the cross examination of the persons from whom these documents have been recovered had been allowed. This is necessary in view of the Apex Court judgment in the case of Kishan Chand Chellara .....

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dence of clandestine removal of MS Ingots by the appellants to SSSRM.

When the studies regarding power consumption for per MT of MS Ingots produced has been conducted in respect of the appellant s unit by an Institute of the Government of India, there is no reason for discarding the report of that Institute and adopting the power consumption of 689 units per MT in respect of another induction thermal unit of M/s NIPL. There is absolutely no evidence of procurement of raw material scra .....

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4/2009, Excise Appeal No. E/215/2009 in Misc No. 51666/2014, Excise Appeal No. E/216/2009, Excise Appeal No. E/265/2009 in Misc No. 52299/2014, Excise Appeal No. E/266/2009 - Final Order No. 50905-50910 /2015-Ex(Br) - Dated:- 19-3-2015 - Hon'ble Mr. Rakesh Kumar, Member (Technical) And Hon'ble Mr. S.K. Mohanty, Member (Judicial),JJ. For the Appellants : Mr. B L Narsimhan, Advocate For the Respondent : Mr. Yashpal Sharma, DR ORDER Per Rakesh Kumar (for the Bench): The facts leading to fil .....

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hereinafter referred to as SSSRM) were searched and from their premises, private ledger account was recovered. M/s SSSRM are manufacturers of bars and rods for which the raw material is MS Ingots which was being purchased by them from several ingots manufacturers involving RMB, JI and APSPL. In the private ledger account recovered from factory of SSSRM, entries regarding purchase of MS Ingots from a number of ingot manufacturers were found and those purchases had not been recorded in their statu .....

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dger account, mentioned above of SSSRM, the officers enquired into the electricity consumption of these ingot manufacturers. In this regard, it was found that while average power consumption per metric ton of RMB, JI and APSPL was 1427 units per MT, 1319 units per MT and 1795 units per MT respectively, the power consumption of another manufacturer M/s Nirmal Inductomelt Pvt. Ltd., Jaithputa Jaipur (NIPL) was 689 units per metric ton. The investigating officers were of the view that higher power .....

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stimated the production of MS Ingots in case of RMB, JI and APSPL on the basis of power consumption of these parties during the period from April 2002 to September 2006, December 2004 to September 2006 and April 2005 to September 2006 respectively, and accordingly, determined their production of MS Ingots during the above period as 38788.486 MT, 16792.957 MT and 17003.16 MT respectively. It is on this basis that the following Show Cause Notices were issued to RMB, JI and APSPL for demand of duty .....

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B. (ii) SCN dated 18.6.2007 issued to JI for demand of duty amounting to ₹ 4,64,35,362/- on alleged clandestine removal of MS Ingots during period from December 2004 to September 2006 along with Interest thereon Under section 11AB and imposition of penalty on them under section 11AC and penalty under Rule 26 of the Central Excise Rules, 2002 on Sh. Bhanwar Lal Gupta, Director of JI. (iii) SCN dated 31.03.2008 was issued to APSPL for demand of duty amounting to ₹ 4,95,38,311/- along w .....

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confirmed along with interest and penalty of equal amount were imposed under section 11AC on the appellant companies and beside this, penalty under Rule 26 of the following amount was imposed on the Directors of the appellant companies. (i) Sh. Ashish Jindal, Director of RMB ₹ 50 Lac, Sh. (ii) Bhanwar Lal Gupta, Director of JI ₹ 25 Lac and (iii) Sh. Gurmukh Singh, Director of APSPL ₹ 25 Lac. Against the above orders passed by the Commissioner, these appeals have been filed. Th .....

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ction of one metric ton of MS Ingots consumes 689 units of electricity, that the ratio of 689 units of per metric ton of MS Ingots produced has been adopting from M/s NIPL, that there is absolutely no justification for adopting the power consumption ratio of 698 units per metric ton to the case of the appellants, inasmuch as each of these three appellants had got a study conducted in respect of their units by National Institute of Secondary Steel Technology of the Ministry of Steel, Government o .....

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pplied to other induction furnace, as the power consumption ratio in an induction furnace unit would depend upon various factors like age of the machinery number of heats during each day, frequency of power break downs etc., that the same view has been taken by the Tribunal in the case of Pragati Steels Pvt. Ltd. vs CCE Kanpur reported in 2012 (286) ELT 253 (Tri.-Del), that the Tribunal in the case RA Castings Pvt. Ltd. vs CCE Meerut-I reported in 2009 (237) ELT 674 (Tri. Del), has held that wit .....

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, and the judgment of Hon ble Allahabad High Court has been affirmed by the Apex Court vide judgment reported in 2011 (269) ELT A108 (SC), that same view has been taken by the Tribunal in the case of CCE Jaipur vs Veenus Alloys Pvt. Ltd. reported in 2012-TIOL-2016-CESTAT-DEL, and also in the case of SRJ Peety Steels Pvt. Ltd. & Ors. vs CCE Aurangabad reported in 2014-TIOL-582-CESTAT-MUM and 2014-1530-CESTAT-MUM, that though in the private ledger account recovered from SSSRM there were some e .....

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on the dates mentioned in the Private ledger account of SSSRM, and that in view of this, the impugned orders are not sustainable. 4. Sh. Yahspal Sharma, the Ld. DR defended the impugned order by reiterating the findings of the Commissioner in the impugned order and pleaded that the ratio of 689 units per MT has been adopted from M/s NIPL, that though M/s NIPL had shown a much higher power consumption ratio, subsequently on the basis of the evidence regarding unaccounted manufacture and clearance .....

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in the private ledger account being maintained by SSSRM, that no credibility can be attached to the report of National Institute of Secondary Steel Technology regarding power consumption ratio in respect of RMB, JI and APSPL, that actual power consumption of these units is around 689 units per MT and based on this, their actual production would be much higher than the production reported by them. Sh. Sharma, therefore, pleaded that there is no infirmity in the impugned order. 5. We have conside .....

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nit in Jaipur M/s NIPL is 689 units per MT. 6. As regards the private ledger account recovered from SSSRM which contained entries regarding supply of MS Ingots by the appellants to them, these accounts being third Party documents could be used against the appellants, only if, the cross examination of the persons from whom these documents have been recovered had been allowed. This is necessary in view of the Apex Court judgment in the case of Kishan Chand Chellaram vs CIT reported in 1980 (supp) .....

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ngots by the appellants to SSSRM. 7. As regards the allegation that the actual power consumption in respect of the appellants unit is 689 units per MT and their higher power consumption per MT is on account under reporting of the production by them, we find that the ratio of 689 units per MT is in respect of NIPL and the Tribunal in its series of judgment in the cases of Motilal Agarwal Steels Pvt. Ltd. vs CCE Kanpur (supra) and Pragati Steels Pvt. Ltd. vs CCE Kanpur (supra), has held that power .....

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