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TMI Blog2015 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Khetan is the Director of M/s Khetan Alloys Pvt, Ltd. (hereinafter referred to as M/s Khetan). The period of dispute in the case of M/s Everest is from May 2003 to September 2003, the period of dispute in the case of MPK is from April 2003 to September 2006 and in the case of M/s Khetan, the period of dispute is from May 2004 to September 2006. 1.2 The raw material for the appellant unit is MS Ingots. The factory premises of M/s Nirmal Inductoment Pvt. Ltd. (hereinafter referred to as NIPL) were searched on 03/10/05 and from the records recovered from them, it appeared that M/s Everest during the period from 02/08/05 to 01/10/05 had received 261.96 MTs of MS Ingots from NIPL, but in their records they had shown the receipt of only 118.260 M.T. of MS Ingots from NIPL and 143.32 MT of MS Ingots appeared to have been received by M/s Everest from NIPL without accountal. Similarly, in the case of M/s MPK, from the records of NIPL from 02/8/05 to 01/10/05 it appeared that M/s MPK had received 80.38 MT of MS Ingots from NIPL but M/s MPK in their records had showed only 40.17 M.T. of Ingots and hence the receipt of 40.21 M.T. of MS Ingots by MPK appeared to be unaccounted. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the period from April 2003 to September 2006 had cleared clandestinely 4680.51 MT of rolled products involving duty of Rs. 1,60,85,657/- without payment of duty. In the case of M/s Khetan, the officers estimated their production during the period from May 2004 to September 2006 as 14176.32 MT against which the production shown in their records was 5657,041 MT and thus it appeared that they have cleared 8570.32 MT of rolled products involving duty of Rs. 2,89,14,441/- clandestinely without payment of duty. 1.5 It is basis of the above investigation that three show cause notices issued to the appellants for demand of the Central Excise duty mentioned above from them alongwith interest thereon under Section 11AB and also for imposition of penalty on them under Section 11AC and the Central Excise Act 1944 and for imposition of penalty on their Directors Shri Suresh Kumar Aggarwal, Shri Suresh Kumar Sharma and Shri Rajendra Kumar Khetan under Rule 26 of the Central Excise Rules. The above show cause notices were adjudicated by the Commissioner of Central Excise, Jaipur one by three separate order-in-original No. 15/09/CE/Commr dated 12/3/09, No. 10/09/CE/Commr dated 12/9/09, No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted the yard stick of power consumption of SSSRM - 102.09 units per MT of the rolled products in respect of the rolling mills of the appellants and on this basis has estimated their production, that the power consumption in the case of the appellant units varies from 225 unit per MT to 275 units per MT, that the rolling mills of the appellants had been inspected by the National Institute of Secondary Steel Technology (NISST) under the Ministry of Steel, Government of India and the NISST had conducted study of the power consumption of the appellant unit and according to the report of NISST, which is also part of the records of each of these appeals, the average power consumption of the appellant units is 230 unit per MT, that there is also notification dated 22/8/05 issued by the Government of Rajasthan under the composition scheme for manufacturers of rolled products of mild steel, that this notification has been issued by the Government of Rajasthan for the purpose of charging sales tax and in this notification the average power consumption of the medium size rolling mills manufacturing rolled products from Ingots has been taken as 225 units per MT, that in view of this, adopti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by conducting experiment, that merely on the basis of the power consumption norms the duty demand cannot be confirmed against the appellant companies, more so, when no study or experiment has been conducted in the case of the appellant units to determine their actual power consumption, that in this regard he relies upon the judgment of the Tribunals in the case of R.A. Castings Pvt. Ltd. vs. CCE, Meerut - I reported in 2009 (237) E.L.T. 674 (Tri. - Del.), that Department's appeal against this judgment was rejected by Hon'ble Allahabad High Court vide judgment reported in 2011 (269) E.L.T. 337 (All.) and the SLP filed against the judgment of Hon'ble Allahabad High Court was dismissed by the Apex court in the judgment reported in 2011 (269) E.L.T. A108 (S.C.), that same view has been taken by the Tribunal in the case of Bhawani Shanker Castings Ltd. vs. CCE, Jalandhar reported in 2009 (246) E.L.T. 332 (Tri. - Del.) and the Department's appeal against this judgment was dismissed by Hon'ble Punjab & Haryana High Court vide judgment reported in 2012 (275) E.L.T. A57 (P&H), that same view has been taken by the Tribunal in the cases of Trikoot Iron and Steel Casting Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the records of NIPL they had supplied certain quantity of MS Ingots to the appellants during the period from 02/8/05 to 01/10/05 and these unaccounted supplies including unaccounted supply to other rolling mills I have been admitted by them before the Settlement Commission and their case has been settled by the Settlement Commission for an amount of Rs. 55,00,000/-, the inevitable conclusion would be that during this period, the appellants units were receiving unaccounted ingots from NIPL and were using the same for unaccounted manufacture of rolled products, which were being cleared clandestinely without payment of duty and when there is clear evidence on record to prove that the appellant were indulging in duty evasion, their production has been estimated on the basis of their power consumption. He, therefore, pleaded that there is no infirmity in the impugned orders. 5. We have considered the submissions from both the sides and perused the records. 6. The appellant are manufacturers of rolled products, the raw material for which is MS Ingots. There is no dispute that NIPL was one of their supplier of MS Ingots. The investigation in respect of the appellant unit started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment also refers to the statements of the Directors of the appellant unit but on going through the same, it is seen that there is nothing inculpatery in their statement admitting the receipt of unaccounted raw material and its use in unaccounted production of rolled products and its clearance. 7.2 The point of dispute is as to whether on the basis of the above evidence, the Commissioner's orders confirming the above-mentioned duty demands against the appellants and imposing penalty on them can be upheld. 8. The Apex court in the case of Kishan Chand Chela Ram vs. Commissioner of Income Tax reported in 1980(supp) Sec-660(para 6) held that when the allegation of tax evasion against an assessee is based on the entries in records and account books of another person such an allegation of tax evasion cannot be upheld against the assessee unless the cross examination of the person from whom records had been recovered has been allowed. In this case, no such cross examination of the concerned persons of NIPL who had made entries in the ledger books had been allowed. Therefore, the entries in the ledger book of NIPL by themselves cannot be treated as an evidence of the appellants havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants is around 230 units per MT. Beside this, we also find that in the notification dated 22/8/05 issued by the Government of Rajasthan under composition scheme for manufacturers of rolled products of mild steel which is a notification issued for charging sales tax under compounded levy scheme from rolling mills, the power consumption norm of ingots based immediate scale rolling mills without any repeaters is mentioned as 225 units per MT. The lower power consumption norm of 180 units per MT is in respect of Ingots based large scale/semi automatic manufacturing units. There is no dispute that the rolling mills of the appellants are not even semi-automatic but are manual and, therefore, in terms of this, notification of the Government of Rajasthan their power consumption norm would be 225 units per MT. In view of this, we hold that the power consumption of SSSRM cannot be applied to the appellant units for estimating their actual production on the basis of their power consumption, more so, when absolutely no study or experiment has been conducted by the Department in support of its claim that the actual power consumption of the appellant unit is 102.09 units per MT. The Apex cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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