New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (7) TMI 460 - CESTAT NEW DELHI

2015 (7) TMI 460 - CESTAT NEW DELHI - 2015 (329) E.L.T. 281 (Tri. - Del.) - Demand of duty on estimated production based on power consumption - period of 01.04.2001 to 31.03.2004 - During this period the factory of the appellant company was not paying any duty and was not registered with the Central Excise Department, as it was availing full duty exemption. - Penalty u/s 11AC - Held that:- When the Department itself had appointed the Centre of Energy Studies and Research for carrying out a surve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Department itself in its appeal against Commissioners order disputes the Commissioners findings regarding generation of electricity from D.G. sets.

Merely on the basis of power consumption norm and that too when there are serious doubts about its correctness, duty demand cannot be confirmed against an assessee, when there is no other corroborative evidence of unaccounted purchase of raw-material and clearance of unaccounted production. In view of this, we hold that the duty demand .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mber (Technical) And Hon ble Mr. S. K. Mohanty, Member (Judicial),JJ. For the Petitioner : Shri. K. K. Anand, Advocate, Ms. Surabhi Sinha, Advocate For the Respondent : Shri. M. S. Negi, DR ORDER Per: S. K. Mohanty 1. The facts giving rise to these three appeals are, in brief, as under:- 1.1 M/s. Satguru Cement P. Ltd., Zeerabad, Distt. Dhar (hereinafter referred to as the appellant company ) are a Private Limited Company engaged in the manufacture of ordinary portland cement chargeable to centr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

receipt of intelligence about duty evasion by the appellant company by under reporting its production of cement, searched the factory premises of the appellant company at Zeerabad, Dist. Dhar, Office premises of the appellant company at 11, 3rd Floor, Daba Bazar, Indore, residential premises of Shri.Jagdish Agarwal, Director of the appellant company in Indore and also the premises of certain traders M/s. Burhani Traders, Khandwa, M/s. Amolak Enterprises, Khandwa, M/s. Mahaveer Transport, Rajgar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llant company was recorded, wherein he stated that he was working in the office at Dava Bazar Indore, and that the documents at Sl. No.7, 13 and 14 of the Annexure to the Panchnama of the search of the office on 27.10.2004 are notebook, ledger and cashbook respectively of the appellant company, which was being maintained by him and contained party-wise details of the dispatch, sale and payment particulars of cement. Statement of Shri Charanjeet Singh Arora, Proprietor of M/s. Arora Road Lines, w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny at Indore and he explained the ledger entries and confirmed that the same pertained to the various transactions during the period from 01.04.2004 to 27.10.2004. 1.3. The statement of Shri Jagdish Agarwal, Director of the appellant company was recorded wherein he stated that the installed capacity of the cement plant was 200 M.T. per day and that the payments against sale of cements had been received by cheque as well as cash the details of which were entered in the ledger in the cash book sei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of rupees one Crore under exemption Notification No.8/03 CE on 14.06.2004 and accordingly the clearance after 14.06.2004 were liable for duty. The duty on the clearances in excess of the exemption limit was worked out as ₹ 16,81,711/- which appeared to have evaded by the appellant. 1.4. During the period from April 2004 to September 2004 the total power consumption in the cement plant of the appellant company was 7,48,710. According to the Department, the production during the period fro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

36. Since, during each of the three financial years the appellant had not paid any duty claming that value of their clearances were within the exemption limit of ₹ 1.00 Crore, while the value of the production during each of these three years, as estimated by the Officers was much more than the exemption limit of ₹ 1.00 Crore, it appeared that during each financial year from 2001-02 to 2003-04, the appellant company had evading the duty, the details of which are given in annexure 29 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ased on the power consumption confirmed the duty demand of only ₹ 3,79,648/- and dropped the balance amount of duty demand. An amount of ₹ 5,00,000/- already paid by the appellant company during investigation was appropriated. Beside this, the Commissioner also demanded interest under section 11 AB on the above mentioned duty demand. While he imposed penalty of ₹ 15,64,359/- on the appellant company under section 11AC, another penalty of ₹ 1,00,000/- was imposed on Shri J .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Tribunal directed the Commissioner to decide the matter afresh after granting reasonable opportunity of personal hearing. 1.7. In denovo adjudication proceedings, the matter was decided by the Commissioner vide order in original No.15/COMMR/CEX/IND-2010 dated 5/5/2010. By this order with regard to the duty demand of ₹ 16,57,293/- based on the entries in the note-book and ledger book seized from the Office for the period from 01.04.2004 to 27.10.2004, the Commissioner confirmed the same .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

demand of ₹ 1,18,40,899/-. Thus, he confirmed the total duty demand of ₹ 42,94,662/- alongwith interest on it under section 11AB. He also imposed penalty of equal amount on the appellant company under section 11AC and penalty of ₹ 1,00,000/- on Shri Jagdish Agarwal, Director under rule 26 of the Central Excise Rules, 2002. Against this order of the Commissioner both the appellant company and its Director Shri Jagdish Agarwal as well as the Revenue are in appeal. 2. Heard both .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from 01.04.2001 to 31.03.2004, in addition to the electricity purchased from the electricity board, the appellant had also used electricity generated by their DG set, that the Commissioner has wrongly arrived at the power consumption norm of 155 units per M.T., that prior to denovo adjudication proceedings the department after remand of the matter by the Tribunal, had appointed the Centre of Energy Studies & Research, Distt. Dhar, Madhya Pradesh for conducting a study regarding power consum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

kash Chandra Jain, a Chartered Engineer, had visited the appellant factory and according to his study, the power consumption was 228 Units per M.T. and subsequently, on 07.03.2006 another Chartered Engineer Shri. K.M.Thompre had visited the appellant s unit and according to his study the power consumption was 231.39 Units per M.T., that the power consumption norm of 212 units per M.T. determined by the Centre of Energy Studies & Research is in accordance with the power consumption norm in re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts per M.T. on the basis of alleged use of DG set for power generation; that as on 01.04.2004 the opening balance of cement as recorded in the appellant company s production records was 372 M.Ts. and production of cement during the period from 01.04.2004 to September, 2004 was much less M.Ts., that the Department has wrongly taken the sale figures of 10,718 M.T. during the period from 01.04.2004 to 30.09.2004 as the production figure, which is totally wrong, as the cement sold during this period .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en affirmed by the Allahabad High Court vide judgment reported in 2011 (269) ELT 337 (All.) and the judgment of Allahabad High Court has further been affirmed by the Apex Court reported in 2011 (269) ELT A108 (SC) and that same view has been taken by the Tribunal in its order dated 20th March, 2012 in the case of CCE, Indore vs. Venus Alloys Pvt. Ltd. It was, therefore, pleaded by Shri Anand that duty demand of ₹ 26,12,951/- for the period from 01.04.2001 to 30th March, 2004 is not sustain .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

settled law that merely on the basis of assuming power consumption norm duty demand cannot be confirmed against an assessee. 4. Shri M.S. Negi, the ld. Departmental Representative, while defending the Commissioner s order confirming the duty demand of ₹ 16,53,293 for the period from 01.04.2004 to 26.10.2004, and also defending the Commissioner s order with regard to confirmation of duty demand of ₹ 26,12,951/- for the period from April, 2001 to March, 2004 based on the power consumpt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6 units per M.T. He also pointed out the statement of Shri Akhil Surve, Manager (Production) of the appellant company who had accepted the power consumption of 72 Units per M.T. Shri Negi, therefore, pleaded that in respect of the period from 1st April 2001 to 31.03.2004, the entire duty demand as made in the show cause notice should have been confirmed as for this period the power consumption norm of 72.36 units per M.T. has been correctly determined by the Investigating Officers. 5. We have co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otal of 235910 bags (11795.5 M.T.) of cement. As per the entries in the notebook seized from the same office of the appellant company during the period from 19.10.2004 to 26.10.2004, another 276 M.Ts. of cement had been cleared. Thus, during the period from 01.04.2010 to 26.10.2004 total cement cleared was 12071.5 M.Ts. However, during the financial year 2004-05 when they were availing of SSI exemption under Notification No.6/2003-CE dated 01.03.2003, only the clearances upto repees one crore in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he appellant as in fact entries in the note book and ledger had been explained by Shri Dharmender Goyal in his statement dated 27.10.2004 and 20.01.2005. Accordingly, we hold that duty has been correctly demanded on the value of clearances during 2004-05 which are beyond rupees one crore and, accordingly, the duty demand of ₹ 16,57,293/- which is on the value of cement cleared beyond rupees one crore has to be upheld. In fact, this duty demand has not even been seriously contested by the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the allegation that the appellant have under reported their production for this period and the under reported production has been cleared clandestinely without payment of duty. For this purpose Investigating officers estimated the actual production for the period from 01.04.2001 to 31.03.2004 by dividing the power consumption during this period by 72.36 as, according, to investigating officers in the appellants cement plant 72.36 units of electricity is required for production of 1 M.T. of cemen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iod 01.04.2004 to 29.09.2004 the production of cement was much less and that the investigating officers have taken the quantity of clearance of cement during this period as the quantity of production of this period. which is not correct, as the quantity of clearances including the unaccounted clearances could be of the period prior to 01.04.2004. It is also the plea of the appellants that after remand of this matter by the Tribunal to the Commissioner for denovo adjudication, the Department had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

February, 2006 and March, 2006, two Chartered Engineers, Shri. Prakash Chandra Jain and Shri K.M. Tompre had visited the appellants units and while Shri Prakash Chandra Jain had given opinion that power consumption norm in their unit is 228 Unit per M.T. Shri K.M.Tompre has given report that the power consumption norm in their cement plant is 231 units per M.T. Thus, it has been pleaded that the power consumption norm determined by the Centre of Energy Studies and Research 212 M.T is comparable .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned in para 9 of the show cause notice. Para 9 (i) gives the month-wise figures of power consumption from April 2004 to September 2004 and mentions total power consumption as 7,48,710. Para 9 (ii) mentions that on going through the clearance of cement shown on page 1 to 9 of the Ledger, Shri Surve has stated that during period 01.04.2004 to 29.09.2004, the production of cement was 10718.5 M.Ts. and after deducting the opening balance of 372 M.T. as on 01.04. 2004 the actual production during 01. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me period, as the cement sold during this period could be out of the stock manufactured during the period prior to 01.04.2004 also. 6.4. The question then arise is as to what is the correct power consumption ratio. We find that in this regard the department itself had got a study conducted through the Centre of Energy Studies & Research in March, 2010 and an Officer of this Institute after visiting the Unit alongwith the Jurisdictional Range Superintendent and Range Inspector had given a rep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r power consumption as 212 unit per M.T. it is totally incorrect for the Commissioner to discard this opinion of an expert and arrive at his own power consumption norm of 155 units by assuming that during the period from 01.04.2001 to 31.03.2004 the appellant had also used electricity generated by the DG sets for which we do not find any evidence. In fact, the Department itself in its appeal against Commissioners order disputes the Commissioners findings regarding generation of electricity from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rably with the power consumption norm determined by two other Chartered Engineers, Shri Prakash Chandra Jain and Shri K.M. Tampre. The Revenue s appeal also mentions that the Commissioner has failed to appreciate the fact that the assessees premises were searched once again by the DGCI on 30th March, 2007 and during the course of investigation at that time also, on comparison of power consumption and the actual production during January 2007 to March, 2007, the power consumption ratio was found .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version