Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 1032 - CESTAT NEW DELHI

2015 (11) TMI 1032 - CESTAT NEW DELHI - 2015 (329) E.L.T. 213 (Tri. - Del.) - Duty demand - Clandestine removal of goods - whether on the basis of the recovery of a private ledger book from the factory premises of SSSRM which contain entries regarding receipt of MS Ingots by SSSRM from the appellant company during the period from April 2005 to August 2005 allegation of clandestine removal can be made against the appellant - Held that:- In terms of the Apex Court judgment in the case of Kishin Ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dger book of SSSRM showing receipt of MS Ingots from the appellant during the period from April 2005 to August 2005 are not supported by any other independent evidence on record. Therefore, we hold that merely on the basis of the entries in the private ledger book of SSSRM, the allegation of duty evasion against the appellant company cannot be sustained.

Merely because during 2003-2004 the appellant sold their finished goods on a small profit margin of ₹ 15 per MT and during 200 .....

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 were under reporting their production and showing their income from manufacturing activity as the income from commission agent service, no adverse conclusion can be drawn from this, as the appellant s claim that they had paid service tax on the commission income and also the income tax had been deducted at the source on the payments being received is not disputed. Moreover, no inquiry has been conducted to prove that these service transactions are bogus.

When the Departme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which the production recorded in the statutory recorded during this period on which duty has been paid is 37478.94 M.T., merely based on the assumed power consumption norm of 689 units per MT for which there is no basis, the appellant unit cannot be alleged to have manufactured and cleared 64511 MT of MS Ingots during the same period. - Impugned order is unsustainable - Decided in favour of assessee. - Excise Appeal No. 1698-1699 of 2009 - Final Order No. 51402-51403/2015 - Dated:- 23-4-2015 - S .....

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 of dispute in this case is from April 2002 to September 2006. The appellant were selling their final product to various rolling mills including Shri Sharma Steel Rolling Mills Pvt. Ltd., Industrial Area, Jodhwara, Jaipur (hereinafter referred to as SSSRM). M/s SSSRM manufacture various rolled products. The rolling mill of SSSRM was visited by the Jurisdictional Central Excise officers on 10/9/05. In course of search of the factory premises, certain loose papers sheets containing despatches o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o September 2005, it appeared that during July and August 2005, 461.31 MT of MS Ingots had been received by SSSRM from the appellant unit in respect of which the appellant unit had not issued any invoices. Beside this, it was also found that during the same period SSSRM had received 29 consignments of Ingots from the appellant unit, the total weight which was 511.26 MT and though the appellant had issued invoices in respect of the same, the details regarding quantity were not matching as the tot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hey have received MS Ingots worth ₹ 5,25,33,509/- and runners and risers ₹ 2,01,000/- from the appellant company without any invoice, the total duty involved on which would be ₹ 86,06,369/-. Thus on the basis of the entries in the private ledger book recovered from SSSRM, the Department has alleged that during the period from April 2005 to August 2005 the appellant company had supplied MS bars and runners and risers valued at ₹ 6,80,94,629/- to SSSRM without payment of du .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for determining the cost of production and according to this study, the investigating officers concluded that while during 2003-2004 on the basis of the cost of production of MS Ingots, and sale price realised on which the duty had been paid, the appellant company made a very insignificant profit of ₹ 15 per MT, during 2005-2006 the appellant company made huge loss of ₹ 1278 per MT. 1.4 The officers, thereafter, studied the power consumption of the appellant unit which during the per .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, that no records of the power failure, and stoppage of production due to power failure was being maintained and during 2005-2006 the company failed to recover the material cost and power cost. According to the Department, however, the power consumed of the appellant should be 689 units per MT of MS Ingots. It is on the basis of this norm that the Investigating Officers estimated the actual production of the appellant company during the period from April 2002 to September 2006 as 64511.25 MT aga .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ompany for demand of duty of ₹ 5,37,28,971/- from them in respect of alleged clandestine removal of MS Ingots during the period from April 2002 to September 2006 alongwith interest thereon under Section 11AB and also for imposition of penalty on the appellant company under Section 11AC and imposition of penalty under Rule 26 of the Central Excise Rules on Shri Harish Aggarwal, Director of the appellant company. 1.7 The above show cause notice was adjudicated by the Commissioner vide order- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Aggarwal. 2. Heard both the sides. 3. Shri Bipin Garg, Advocate, the learned Counsel for the appellant, pleaded that just because the name of the appellant company was found as supplier of MS Ingots in the private ledger book of SSSRM, the Department cannot allege that the appellant has supplied the MS Ingots to SSSRM without issue of invoices, as other than the ledger entries, in the private ledger book of SSSRM, there is no other independent evidence in this regard, that the allegation of the .....

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 be made against an assessee and in this regard he relies upon the judgments of the Tribunal in the cases of CCE, Indore vs. Rajratan Synthetics Ltd. reported in 2013 (297) E.L.T. 63 (Tri. - Del.), CCE, Coimbatore vs. Chola Spinning Mills (P) Ltd. reported in 2009 (92) R.L.T. 731 (CESTAT - Che.), Rama Shyama Papers Ltd. vs. CCE, Lucknow reported in 2004 (168) E.L.T. 494 (Tri. - Del.) and Sunhill Ceramics Pvt. Ltd. vs. CCE, Rajkot reported in 2007 (217) E.L.T. 353 (Tri. - Ahmd.), that the power .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ore, while from September 2004 to September 2006 the installed capacity of production can be taken as 12600 MT per annum as shown in the cost audit report, during period from April 2002 to August 2004 the capacity would be only 6300 MT per year, that on this basis, the maximum production during April 2002 to August 2004 could be only 15750 MT @ 6300 MT per year and the maximum production during September 2004 to September 2006 @ 12,600 MT per annum would be only 26200 MT and thus the maximum pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e furnace of 3 MT capacity in the appellants unit and only in September 2004 the old furnace was replaced by a new furnace of 6 MT capacity, that as regards the commission income of ₹ 1,16,25,916/- shown in the balance sheet for 2005-2006, the appellant have paid service tax on this amount and tax was also deducted at source, that no investigation has been done to establish that the appellant had not provided any commission agent service, that in view of this, no adverse conclusion can be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

269) E.L.T. 337 (All.) and the SLP filed by the Government 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 this judgment which has been upheld by Hon ble Punjab & Haryana High Court vide judgment reported in 2012 (275) E.L.T. A57 (P&H) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

calculation of raw material fed into the process or on working of the machinery as noticed during test inspections when there is no tangible evidence in support of the allegation is not sustainable, that the ratio of the Apex courts judgment is squarely applicable to the facts of this case, more so, when no test/inspection/study of the appellants unit has not been conducted to determine its average power consumption per MT of MS Ingots produced and an arbitrary power consumption norm of 689 u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

missioner and pleaded that the appellant during the period of dispute were selling the goods at very nominal profit or at price much below the cost of production, that no businessman would continue to conduct his business when he is incurring huge losses, that from the entries in the private ledger book of SSSRM it is clear that the appellant during the period from April 2005 to August 2005 had supplied huge quantity of MS Ingots without issue of invoice and without payment of duty to SSSRM and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere recovered. The private ledger book was containing entries regarding purchase of consignment of MS Ingots from the appellant company during the period from April 2005 to August 2005. Since as per the records of the appellant company no Central Excise invoices had been issued in respect of those supplies, Department has alleged that those supplies has been made without payment of duty and according to the Department, the total value of Ingots supplied without payment of duty during the 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

e period from April 2002 to September 2006 and adopting the norm that for manufacture of 1 MT of MS Ingots, 689 units of MT of power is consumed have estimated their production during this period as 64511.25 MT as against which the appellant shown the production only 37478.94 MT. It is on this basis that it has been alleged that during period from April 2002 to September 2006 the appellant have clandestinely cleared 27032.313 MT of MS Ingots on which the duty evaded is ₹ 5,37,28,971/-. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. has been kept. The special audit report also mentions that during 2004-2005 and 2005-2006 the appellant unit had received commission income of ₹ 1,16,25,916/- and that while during 2003-2004, they have sold their goods on a very meagre profit margin of ₹ 15 per MT, during 2004-2005 they have sold their goods at a huge loss of ₹ 1278 per MT and that no manufacturer would sale his goods at such a huge loss and still continue in his business. 6.1 The contention of the appellant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

varies mostly between 1,000 to 1,100 units per MT and during 2005-2006 it varied 1,100 to 1,486 units per MT and that the norm of 689 units per MT is absolutely without any basis. It has also been pleaded by the appellant that the capacity of production of the appellant upto August 2004 was only 6,300 MT per annum as it is not disputed upto August 2004 only one furnace of 3 MT of capacity was installed and only in September 2004 it was replaced by a new furnace of 6 MT of capacity. According to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ant actual production during the period of dispute was 64511.25 MT is absolutely without any basis. 7. Coming to the 1st question as to whether on the basis of the recovery of a private ledger book from the factory premises of SSSRM which contain entries regarding receipt of MS Ingots by SSSRM from the appellant company during the period from April 2005 to August 2005 allegation of clandestine removal can be made against the appellant we are of the view that in terms of the Apex Court judgment i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e private ledger book of SSSRM showing receipt of MS Ingots from the appellant during the period from April 2005 to August 2005 are not supported by any other independent evidence on record. Therefore, we hold that merely on the basis of the entries in the private ledger book of SSSRM, the allegation of duty evasion against the appellant company cannot be sustained. 7.1 The second evidence relied upon by the Department is cost audit report according to which during 2003-2004 the appellant had so .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lant sold their products at the loss of 1278 per MT, no adverse conclusion can be drawn and merely on profit and loss data it cannot be concluded that the appellant were indulging in duty evasion by clandestine removal during this period. Though the Department alleges that during 2004-2005 and 2005-2006 the appellant had received the commission income of ₹ 1,16,25,916/- from commission agent certificate from parties which is an unrelated activity and thereby implying that the appellant wer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ower consumption norm. In this regard the appellants plea is that their power consumption norm mostly varies between 972 units to 1486 units per MT and during 2005-2006 it has varied 1000 to 1100 per MT and that the power consumption norm of 689 units per MT has been adopted absolutely without any basis. We find that there is substance in this contention of the appellant as the impugned order does not spell out as to on what basis of power consumption norms 689 units per MT has been adopted whe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

umber of heats per day, whether there are frequent power break down etc. The productivity of an induction furnace unit would be optimum when the unit works round the clock while it will be lower if it works only one shift in a day. The Tribunal in the case of R.A. Castings Pvt. Ltd. vs. CCE, Meerut I reported in 2009 (237) E.L.T. 674 (Tri. Del.), has held that merely on the basis of power consumption norm, the duty demand based on the allegation of clandestine manufacture and clearance cannot be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s appeal against which was dismissed by Hon ble Punjab & Haryana High Court vide judgment reported in 2012 (275) E.L.T. A57 (P&H), and also the cases of Trikoot Iron and Steel Casting Ltd. vs. CCE, Meerut reported in 2015 (315) E.L.T. 65 (Tri. - Del.) and Pragati Steels Pvt. Ltd. vs. CCE, Kanpur reported in 2012 (286) E.L.T. 253 (Tri. - Del.). Recently the Tribunal in the case of SRJ Peety Steels Pvt. Ltd. and others vs. CCE, Aurangabad reported in 2014 - TIOL - 1530 - CESTAT - MUM has .....

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