TMI Blog2015 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered from the premises of M/s. Manu Steels which are one of the main corroborative, evidence are in the nature of third party documents, and, therefore, in view of Apex Court’s judgment in the case of Kishanchand Chellaram v. CIT, reported in [1980 (9) TMI 3 - SUPREME Court], the cross-examination of Sh. S.K. Pansari from whose premises these documents had been recovered was necessary, more so when the same had been requested and as such the denial of his cross-examination has resulted for denial of natural justice - Matter remanded back - Decided in favour of assessee. - E/57063 & 57066/2013-EX(DB) - Final Order Nos. A/52487-52488/2014-EX(DB) - Dated:- 26-5-2014 - Justice G. Raghuram, President and Shri Rakesh Kumar, Member (T) Shri Somesh Arora, Advocate, for the Appellant. Shri Pramod Kumar, Jt. CDR, for the Respondent. ORDER [Order per : Rakesh Kumar, Member (T)]. - The facts leading to filing of these two appeals and stay application are, in brief, as under :- 1.1 M/s. Agrawal Round Rolling Mills Ltd., Raipur, Chhattisgarh (hereinafter referred to as Appellant Company ) are engaged in the manufacture of Mild Steel Ingots (MS Ingots) and rolled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appeared to be backed by the fact that a number of entries in the records recovered from M/s. Monu Steel were tallying with the entries regarding sales as recorded in the record of the Appellant Company. 1.3 Since the records recovered from M/s. Monu Steel read with his statements indicated that the appellant were making clandestine clearances without payment of duty, further scrutiny of the records of the Appellant Company was conducted. It was found that there were two induction furnace of 6 MT capacity each were installed in the factory premises of the appellant company and as per the technical literature of the furnace manufacturer M/s. Inductotherm average power consumption per MT of MS Ingots produced was 830 units. However, while average power consumption during 2006-07 varied from 3305 units per MT for 1444 units per MT which appeared to be abnormal. Moreover there were vide fluctuations from to months in power consumption per MT of MS Ingots produced which indicated that the appellant were under reporting the production of MS Ingots. By taking average power consumption as 830 units per MT, it appeared that total production of MS Ingots during period from April 05 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd both the sides. Though the matter was listed only for the hearing of the stay applications, after hearing the same for sometime, the Bench was of the view that the matter can be taken up for final disposal as the same has to be remanded. Accordingly with the consent of both sides, the matter was heard for final disposal. 3. Sh. Somesh Arora, Advocate, the learned counsel for the appellant, pleaded that duty demand of ₹ 5,32,49,247/- against the appellant on alleged clandestine removal of 21082 MT of MS Ingots during period from April 05 to Aug. 06 is based on the assumption, that for manufacture of one MT of MS Ingots, 830 units of electricity is consumed and that the proportion of Pig Iron in the manufacture of MS Ingots cannot be more than 8%., that another evidence relied upon by the Department is the papers recovered from the premises of M/s. Monu Steel (Proprietorship Concern of Sh. S.K. Pansari), that the Appellant had sought cross-examination of the person from National Institute of Technology, Raipur who had tendered the opinion regarding consumption of Pig Iron and also the cross examination of Sh. S.K. Pansari of M/s. Monu Steel but the cross-examination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout undue delay or expense which the officer concerned considers un-reasonable, that in terms of the Provisions of Section 9D(2) the Adjudicating Authority before relying upon the statement of a witness against the assessee, has to ascertain its correctness by examining him and permitting his cross-examination, that in this regard he relies upon the judgment of Hon ble Allahabad High Court in the case of Govind Mills Ltd., reported in 2013 (294) E.L.T. 361 (All.), that in view of the above the denial of cross-examination has resulted in violation of the principle of natural justice, that Adjudicating Officer in the impugned order (para 3.5.12 of the impugned order) has relied upon collateral evidence in form of Appellant s transactions in commodity trading through National Commodity Derivative Exchange Ltd., Mumbai, which on inquiry were alleged to be fictitious transactions and on this basis it has been alleged that the appellant had shown an income of ₹ 7,84,93,467/- from commodity trading, which actually is the income from un-accounted manufacture and clandestine sale of the MS Ingots, that Commissioner in this regard has relied upon certain evidence which had not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge Ltd., Mumbai, showed that appellant company had not made any transactions is another evidence showing that the income from the un-accounted production and sale of steel Ingots was being shown an income from commodity trading, that in these circumstances, denial of cross-examination would not amount to violation of natural injustice and in this regard Commissioner has correctly relied upon the judgment of Apex Court in the case of Kanungo Co. reported in 1983 (13) E.L.T. 1486 (S.C.), that in the appellant s factory, that there are two furnaces, each of 6 MT capacity and on the basis of declared production of MS Ingots their capacity utilization was 30% to 37% while such low capacity utilization is economically not viable, that in view of this, the Commissioner s Order is based on concrete evidence on record and as such there was no violation of natural injustice. He, therefore, pleaded that there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the records. The duty demand for the period from April 05 to Aug. 06 is in respect MS Ingots which are manufactured by the appellant. The raw material for the MS Ingots is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant company is that the enquiry with Sh. Sharad Joshi, Manager (Legal), M/s. National Commodity Derivative Exchange Ltd., Mumbai, who has stated that the appellant company was not registered as a client with any member of the Exchange had not been disclosed in the Show Cause Notice. It is seen that contents of the letter dated 30-9-2008 Sh. Sharad Joshi referred to in Para 3.5.12 of the impugned order had not been disclosed in the Show Cause Notice and therefore the same cannot be relied upon in the Adjudication Proceedings, as in view of the judgment of Apex Court in the case of CCE v. Ballarpur Industries Ltd. (supra), if the Show Cause Notice did not make an allegation that the income from un-accounted manufacture and sale of MS Ingots was being shown as income from Commodity Trading, such an allegation cannot be made the basis for confirming duty demand in the Adjudication Order. 7. Since the duty demand against the appellant is based on Technical Literature of M/s. Inductotherm wherein it is mentioned that for production of one MT of MS Ingots is 830 units of electricity is consumed and also the opinion given by M/s. National Institute of Technology, Raipur re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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