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2015 (4) TMI 734 - CESTAT NEW DELHI

2015 (4) TMI 734 - CESTAT NEW DELHI - 2015 (328) E.L.T. 124 (Tri. - Del.) - 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 neces .....

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e more so, when other than the ledger entries of SSSRM there is no other evidence 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 .....

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Excise Appeal No. E/213/2009 in Misc. No. 51665/2014, Excise Appeal No. E/214/2009, 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 .....

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M/s Shri Sharma Steel Rolling Mills (P) Ltd. located at Jothwara, Jaipur, (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 manuf .....

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d any unaccounted MS Ingots to SSSRM on the days mentioned in the private ledger 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 pe .....

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adopting the power consumption of 689 units per metric ton in case of NIPL estimated 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 foll .....

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e 26 of the Central Excise Rules, 2002, on Sh. Ashish Jindal, Director of RMB. (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 i .....

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ner of Central Excise, Jaipur by which the above mentioned duty demands were 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 th .....

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nvoices had been issued by the appellants; and (b) the assumption that production 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 In .....

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held that power consumption ratio of one induction furnace unit cannot be applied 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. .....

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n ble Allahabad High Court vide judgment reported in 2011 (269) ELT 337 All., 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 .....

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ce regarding any unaccounted supply of MS ingots by the appellants to SSSRM 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 .....

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al is clear from the entries regarding receipt of MS Ingots on certain dates 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, .....

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Power consumption per MT of MS Ingots in case of another induction furnace unit 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 ju .....

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r entries of SSSRM there is no other evidence of clandestine removal of MS Ingots 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 (su .....

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