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TMI Blog2015 (9) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Cenvat credit. As such, it was held that appellant have taken Cenvat credit of excess quantity on pig iron, scrap, CPC production without actual use of the same in the manufacture of their final product. Accordingly, proceedings were initiated against them resulting in confirmation of demand of duty of Rs. 5,69,46,336/-, along with confirmation of interest and imposition of penalty. The impugned order of Commissioner is appealed against by way of filing of an appeal along with stay petition. 3. Arguing on the stay petition, learned advocate Alok Barthwal appearing for the appellant, drew our attention to the finding of the adjudicating authority and pleaded that entire case of the Revenue is based upon theoretical inputs/output ratio and on the opinion of NIT Raipur. The adjudicating authority on the above basis has come to the conclusion that the appellant has shown excess receipt of their raw materials and excess utilization of the same in the manufacture of their final product. He submits that apart from the opinion of NIT Raipur, there is virtually no other evidence on record either as regards non-receipt of their inputs or as regards the clearance of the same, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be deviated from. 6. As such, we direct the applicant to deposit an amount of Rs. 30,00,000/- (Rupees Thirty lakhs only) in the present case as a condition of hearing of their appeals within about 8 weeks from today and report compliance on ...... Subject to the deposit of above amount, the pre-deposit of balance amount of duty and entire amount of penalty is waived and its recovery stayed during the pendency of the appeals. 7. Stay petitions are disposed of in the above terms. (Pronounced in the open Court on ) Sd/- (Archana Wadhwa) Member (Judicial) 8. [Per : Manmohan Singh, Member (T)]. - I observe that in the draft order recorded by the learned Member (Judicial), it has ordered deposit of Rs. 30 lakhs against the demand of Cenvat credit of Rs. 5.69 crores and a penalty of equal amount of Rs. 5.69 crores in addition to interest amount. I am of the opinion that once having come to the conclusion that it is not a fit case for complete waiver of the amount sought to be recovered by the Revenue, the quantum of pre-deposit has to be reasonable enough so as to ensure that the appellant is not denied his right to appeal, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermine the scope of any further loss other than what was considered in the analysis made by the Department. The report of the NIT clearly indicates that there was no possibility of any further loss that what has been considered by the Department in their calculations. In this regard Para 5 of the impugned order may be referred which is based on NIT report. In this regard it is also worthwhile to refer to Para 7 of the impugned order : 5. The NIT, Raipur (Institute of National Importance) was requested to comment up on the scope of any loss other than that considered in analysis made by the Department. The NIT clearly replied in negative and said all possible losses had been considered in the calculation made by the Department. Following benefit of doubts had been given in favour of the Noticee while making the above calculation for the sake of clarity of issue :- (i) It was assumed that they used materials having carbon on lower side in the composition range to produce ingots had carbon on higher side in the range. For example their supplier might have given pig iron which Carbon ranging from 3.6% to 4.2%, but it had been treated that they mig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition range on lower side. For that purpose, by doing these calculations, proportion of charge materials is adjusted in such a fashion that the desired composition was achieved with minimum addition of expensive materials like Ferro-Alloys or coke. In no circumstances excess composition in the heat was allowed as it would delay the production, raise the cost of production and also cause rejection by the customer. 12. It is also seen from Para 8.3 that the appellants were during the course of audit specifically asked to explain the reasons for manufacturing MS ingots in their factory during the years 2006-2007 to December 2010 at a cost that was higher than the cost of M.S. ingots available in and purchased by them from the open market. But they did not respond to this query. It further emerges that once the value of the materials allegedly not used in the manufacturing process was taken out, their cost structure came in line with the material available in the market. I find that the Revenue has adduced enough practical examples (Para 17.1) to show that such a high quantity (17% of pig iron) could not have been used as other units have consumed maximum 6% of pig iron. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in structural steels. The fact that noticee was manufacturing M.S. Ingots which itself was evident that they did not require carbon more than 0.25%. 17. Under these circumstances, prima facie it is proved that consumption of pig iron has been shown in excess than it is actually required. Utility of carbon in manufacture of M.S. ingots is only 0.25% but from the analysis of consumption of carbon, it is observed that per charge of carbon comes to 1.0% to 2.0%. With this carbon content, there can be no manufacture of MS Steel. With this carbon content, only high carbon product can be manufactured. This factor indicate that actually required carbon for manufacture of M.S. Ingots is 0.25 but overall consumption of carbon shows leading a situation that excess receipt and abnormal consumption of raw material (pig iron) is shown which only indicates that some documents have been received without accompaniment of material availing large amount of Cenvat credit. 18. From the above discussion, I am of considered opinion that ends of justice shall be met if appellants are ordered to make a partial deposit of Rs. 1.25 crores within specified period of eight weeks. Compliance shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the wastage of 5 - 8% is admissible. On the other hand, he submits that as per the report of NISST, Raipur the wastage can be 20 - 25% and a survey was conducted by the independent Chartered Engineer in their factory, who has given his report that consumption of input in the applicant's factory is absolutely correct. In this circumstance, the denial of input credit by the lower authority is not sustainable. In alternate, he submits that the applicant is having a good case on limitation also as in this case demands pertains to 2006-07 to 2010 and the show cause notice came to be issued only on 6th May, 2011 by invoking extended period of limitation. The show cause notice is barred by limitation as the applicant is filing their ER 1 returns and ER 6 returns regularly. Particularly, the ER 6 return are showing consumption pattern of input of the applicants. Therefore, it cannot be alleged that applicant has suppressed any fact from the Department. Therefore, the demands are barred by limitation. He further submits that in the case of Sanco Plastics Pvt. Ltd. v. CCE, Delhi reported in 2004 (176) E.L.T. 740 (Tri.-Delhi) this Tribunal has taken a view that when their own conflicting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has produced 2 reports showing consumption pattern of the input which show that the pattern the consumption shown by the applicant is correct. Further, in the case of Sanco Plastics Pvt. Ltd. (supra) this Tribunal has held that in view of the conflicting opinion brought on record by both the sides for consumption pattern and the allegation is not proved by tangible evidence, in that case allegation is not sustainable. In this case also no investigation took place and there is no allegation that the applicant has not received the input or cleared input/finished goods clandestinely. Further, when the applicant is filing ER-6 returns regularly showing their consumption pattern, in these circumstances, the applicant prima facie having a case on limitation also. 28. In these circumstances, I concur with the view taken by the Hon'ble Member Judicial relying on the decision of Aditi Ispat (supra) to make pre-deposit of Rs. 30.00 lakhs at this stage. 29. The file is to be submitted to the referral bench for appropriate action. (Pronounced on 28-2-2014) Sd/- (Ashok Jindal) Member (Judicial) Final Stay Order No. .............../2014-Ex(DB) 30. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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