TMI Blog2012 (3) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... m for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. Appeal rejected - demand set aside - decided against Revenue. - Excise Appeal No.3191 of 2007 E/Misc/407-408/2009 & 449/2010 - Final Order No. A/348/2012-EX(DB) & Misc. Order Nos. 272-274/2012-EX - Dated:- 20-3-2012 - Archana Wadhwa Rakesh Kumar,JJ. For The Appellant : Shri R K Verma, SDR For The Respondent : Shri K K Anand, Adv. JUDGMENT Being aggrieved with the order passed by the Commissioner vide which he has vacated the show cause notice issued to the respondents, the Revenue has filed the present appeal. 2. We have heard Shri R.K. Verma, learned DR for the Revenue and Shri K.K. Anand, Advocate appearing for the respondent. 3. As per facts on record, the respondents are engaged in the manufacture of MS ingots falling under Chapter 72 of the Central Excise Tariff by melting sponge iron and MS scrap in the inducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, he stated that the electricity consumption in their factory is not more than the normal requirement for the recorded production. 7. Regarding the figures of electricity expenses shown in the balance sheets for the year 2001-2002 and 2002-03, Shri Nand Kishore Gaur stated that from time to time Additional Cash security is charged by MPSEB in the electricity bills, which is not in the nature of expenditure on electricity. He also stated that arrears of electricity charges in respect of M/s. Pan Steel Pvt. Ltd. have not been paid by them due to some dispute with MPSEB. Therefore, he stated that actual expenditure on electricity shown in the balance sheets is less than the total amount in the bills. 8. Shri Nand Kishor Gaur further stated that the other income shown in the balance sheets pertains to the commission income earned in the trading of machinery etc. He stated that no profit is being earned from the manufacturing activity. He deposed that the unit is being run with the expectation that circumstances would be favourable in future and it would start earning profit. 9. On the above investigation, Revenue was of the view that respondents had not accounted for the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al opinion report of 1IT, Kanpur. 14. The Commissioner decided the above show cause notice vide order in original No. 23/Commr/CEX/IND/07 dated 28.8.07. The Commissioner has held that the report of IIT, Kanpur deals with the productivity of the furnace only and not the factory as a whole. The Commissioner observed that the party have submitted an elaborate list of items which can increase the auxiliary loads such as running water pumps, circulation pumps, water supply pumps of tube well and well, cooling tower, DM water softening plant, 3 hoists, tilting arrangements, compressors, welding transformers, weight bridge, bundling machine, factory maintenance work, lights and fans, air conditioners etc. 15. The Commissioner further held that the charge of clandestine removal based on electricity consumption alone without any corroborative evidence is not sustainable. He observed that in this case there does not exist any direct evidence of clandestine removal. He held that demand on clandestine removal cannot be raised on the basis of estimated production as no evidence has been garnered to prove that the goods were actually manufactured and then removed from the factory premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption. 18. The Tribunal in the said decision held as under:- 20.2 We note that no experiments have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing one MT of steel ingots. It is the basic philosophy in the taxation matters that no tax can be levied on the basis of estimation. In this case, there is added problem. Estimation of production fluctuates widly depending upon the fact as to which report is adopted. Tax is on manufacture and it is to be proved beyond doubt that the goods have been actually manufactured, which are leviable to excise duty. Unfortunately, no positive evidence is coming on record to that effect. Article 265 of the Constitution of India says that no tax shall be levied or collected except by authority of law. Unless the manufacture of the steel ingots is proved to the hilt by authentic, reliable and credible evidence, duty cannot be demanded on the basis of hypothesis and theoretical calculations, without taking into consideration the ground realities of the functioning of the factories. High consumption of electricity by itself cannot be the ground to infer that the factories were engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 343 (T) (viii) M/s. Madhu Products v. CCE, Hyderabad - 1999 (111) E.L.T. 197 (T). 22. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to: (i) Receipt of raw material inside the factory premises, and non-accountal thereof in the statutory records; (ii) Utilization of such raw material for clandestine manufacture of finished goods; (iii) Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them. packing material used, records of security officers, discrepancy in the stock of raw materials and final products; (iv) Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, transporters' documents, such as L.Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. In the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally carried out and reflected in the books of accounts and records duly assessed, audited and accepted by other revenue authorities. 19. After observing so, the Tribunal also took into consideration various precedent decisions of the judicial and quasi-judicial authorities and held that the demands of duty are not sustainable. The said decision of the Tribunal was appealed against by the Revenue before the Hon'ble High Court of Allahabad and the appeal filed was rejected as reported in Commissioner of Central Excise vs. R.A. Castings Pvt. Ltd. [2011 (269) ELT 337 (All)]. The relevant paragraph of the said decision is reproduced below for better appreciation as under: 3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise Service Tax Appellate Tribunal, New Delhi. The Tribunal observed that it is settled principle of law that the electricity consumption can not be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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