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CCE, Raipur Versus M/s. Shiv Real Ispat Pvt. Ltd.

Clandestine removal of goods - Bogus transactions - Department was of the view that the transactions of commodity trading shown by the respondent are bogus transactions and represent clandestine removal of manufactured goods - difference between the sales declared in the ER-1 returns and sales figures as reflected in their books of accounts - Held that:- Moreover merely on the basis that the respondent had shown some bogus transactions regarding trading in commodities through commodity exchange .....

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the Commissioner (Appeals).

As regards, duty demand of ₹ 1,05,611/- based on the difference between the value of sales as reflected in their ER-1 returns for 2006-2007 and as reflected in their books of accounts, we have find that the Commissioner (Appals) has discussed this matter in detail and we agree with the findings of the Commissioner (Appeals) that merely on the basis of this difference, it cannot be presumed that the same represents either the value of the clandestinely .....

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ing to filing of this appeal by the Revenue are, in brief, as under. 1.1 The respondent are manufacturers of rolled products of Iron and Steel chargeable to Central Excise duty falling under Chapter 72 of the Central Excise Tariff. In course of inquiry conducted in respect of the respondent company, it was found that during 2006-2007 in their profit and loss account they have shown an income of ₹ 35,05,614/- from commodity trading in Multi Commodity Exchange of India, Mumbai (MCX) through .....

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agement are not matching with the trades executed in the exchange. On the basis of this letter, the Department was of the view that the transactions of commodity trading shown by the respondent are bogus transactions and that the income of ₹ 35,05,614/- shown for the year 2006-2007 is actually the income from the respondent s clandestine removal of their finished goods on which, the duty involved is ₹ 5,77,725/-. 1.2 It was also found that there was difference between the sales decla .....

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es, MS Rounds etc. varied from 150 units per M.T. to 786 units per M.T. It was found that even the average annual consumption of electricity also varied from 327 units per M.T. to 402 units per M.T. which appeared to be abnormally high. The capacity utilisation of the respondent company during 2006-2007 was found to be 31.41% while the same during 2007-2008 and 2008-2009 was found to be 43.65% and 64.73% respectively. The Investigating officers were of the view that such low capacity utilisation .....

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was adjudicated by the Additional Commissioner vide order-in-original dated 30th January 2012 by which he confirmed the duty demand alongwith interest under Section 11AB and imposed penalty of equal amount on the respondent under Section 11AC. However, on appeal being filed to CCE (Appeals), he, vide order-in-appeal dated 21/8/12, holding that the evidence on record is not sufficient to sustain the allegation of duty evasion against the respondent he set aside the Additional Commissioner s order .....

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ith the transactions executed through their Member M/s Ramdoot Management, it is very clear that the respondent have shown only bogus transactions regarding sale and purchase on the commodities exchange so as to show the income from the unaccounted sale of their finished product as income from the trading on commodity exchange, that therefore the duty demand of ₹ 5,77,725/- is on strong footing, that similarly the respondent have not given any explanation for difference between the value o .....

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units per M.T. to 786 units per M.T. and if the ratio of 150 units per M.T. of rolled products is adopted, on the basis of their electricity consumption their production during the period of dispute should be 33,007 M.T. as against the production of 13,337 shown by them, that the percentage of capacity utilisation which in the case of the respondent during 2006-2007 was 37% is also an indication that the appellant were not reflecting their actual production in their books of accounts, that besid .....

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y Trading on MCX, that the transactions in commodity trading were through M/s Ramdoot Management Pvt. Ltd., Kolkata and payment made to M/s Ramdoot Management Pvt. Ltd., Kolkata were by account payee cheques, that in any case, since the cross examination of the Assistant Vice President on whose letter the Department has relied upon has not been allowed, no adverse conclusion can be drawn on the basis of the same, that in this regard, he relies upon the judgment of Hon ble Allahabad High Court in .....

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gment Hon ble Allahabad High Court already held that merely on the basis of variation in electricity consumption, the allegation of unaccounted production and its clandestine removal cannot be made against an assessee, that this judgment of Hon ble Allahabad High Court has been upheld by the Apex court vide judgment reported in 2011 (269) E.L.T. A108 (S.C.), that merely on account of difference between the value of sales as reflected in ER-1 return and as reflected in the balance sheet, the alle .....

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bogus. On this basis, the Department has presumed that this income was the sale proceeds of the finished goods manufactured and sold them without accountal in their books of accounts. In this regard the main evidence relied upon by the Department is the letter dated 29/9/09 of the Assistant Vice President of the Commodity Exchange informing that the respondent is not registered with their Member M/s Ramdoot Management Pvt. Ltd., Kolkata and that the contract notes are not matching with the trad .....

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