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TMI Blog2015 (11) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In the course of enquiry by the jurisdictional central excise officers heat wise records for certain days, maintained by the production department were examined in the course of which it was found that average chromium content of SS flats/billets manufactured by the appellant was 13.1% and average chromium content of ferro chrome used was 61.26% and that there was loss of chromium to the extent of 8.67%. The officers on the basis of records maintained by the appellant ascertained the consumption of ferro chrome during the period from 1997-98, 1998-99,1999-2000,2000-01 and 2001-02 (upto Nov.01) as 12135.92 MT, 10851 MT,10520.19 MT, 13756.93 MT and 10403.75 MT respectively and the chromium content of ferro chrome used during thse periods were ascertained as 63.79%,60.66%, 60.68%, 60.06%, 61.26% and 60.18% respectively. On the basis of this, the officers determined chromium used for manufacture of stainless steel during different periods. It was assumed by the officers while using chromium in form of ferro chrome 8.67% of the chromium content is lost and in the other words out of total chromium content of ferro chrome, only 91.33% would would have gone into stainless steel manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which has been adjudicated vide Order-in-Original No.20/Commr/GZB/07 dt.29.3.07 and, therefore, this amount should be excluded, but this plea was not accepted by the Commissioner on the ground that in this regard, the appellant have not submitted any record in the form of show cause notice. 1.3 Against this order of the Commissioner these appeals have been filed alongwith stay applications. 2. Heard both sides in respect of the stay applications. 3. Shri Prabhat Kumar, Advocate, the learned Counsel for the appellant, pleaded that out of total demand of Rs. 26,25,16,682/-, the duty demand of Rs. 11,15,22,355/- for the period 1.4.97 to 30.1.99 is covered by another show cause notice dt.21.3.2000 adjudicated vide Order-in-Original No.20/Commr/GZB/07 dt.29.3.07, that in this regard, a specific plea has been made before the Commissioner which is clearly recorded in para 3.6.1 of the impugned order and in support of this plea, he had submitted a copy of the show cause notice dt.29/1/2000, but the Commissioner as recorded in his finding in para 4.22 of the impugned order, has wrongly not accepted this plea, and if duty demand of Rs. 11,15,22,355/- is excluded, the rest of the duty de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from sugar cane is not sustainable without tangible evidence of clandestine removal, that ratio of this judgement of the apex court is squarely applicable to the facts of the present case, that in this case, there is absolutely no evidence of any clandestine removal, inasmuch as there is no evidence to show as to which customers the unaccounted production has been sold, that in view of this, the appellant have strong prima case in their favour and hence the requirement of pre-deposit of duty alongwith interest on it and penalty by the appellant company and also the requirement of pre-deposit of penalty by the other appellants may be waived for hearing of their appeals and its recovery may be stayed till the disposal of the appeal. 3.1 Shri Prabhat Kumar further submitted that the factory is closed since 2008 and the appellant company is facing acute financial hardship and for this reason also there is a case for waiver of the requirement of pre-deposit 4. Shri M.S.Negi, the learned DR opposed the stay applications by reiterating the findings of the Commissioner in the impugned order and pleaded that on the search of the premises of the appellant company on 25.11.2000, the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Negi also pointed out that in para 4.8 and 4.9 of the show cause notice, according to which consignments of SS flats were removed during night by some transporters without payment of duty and for which higher rate of transportation charge of Rs. 1475/- per truck instead of Rs. 800/- per MT was paid. He has accordingly pleaded that the duty demand has been correctly calculated on the basis of chromium content of SS billets/flats, chromium content of ferro chrome and recovery percentage of chromium from ferro chrome in the manufacturing process. 4.3. Shri Negi also pleaded that in the course of search of the factory premises and other premises of the appellant company on 25-26.11.2000, certain documents were recovered which indicated that during the period 1.11.2000 to 24.11.2000, certain consignments had been cleared by the appellants during the night which were neither recorded in the RG-1 nor any invoices had been issued and this evidence also supports the department case of under reporting production and clandestine clearance of unaccounted production by the appellant company. He stated that their records/statements indicated the duty evasion of Rs. 37,34,861/- on clandestine re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umptions but taking different percentage of chromium content of SS billets and chromium content of Ferro chrome and different percentage of recovery of chromium Ferro, that in view of decision Apex Court in the case of Nizam Sugar Factory vs. CCE, AP-2006 (197) ELT 465 (SC) in respect of the show cause notice 1/5/02 extended period would not be applicable and hence, duty demand made by the show cause notice dated 1.5.2002 is time barred. 5.1. With regard to the plea of ld.DR that certain records recovered from the appellant company and the statements of certain persons, Shri Ganesh Sharma, Shri Vinod Sharma, Authorised Signatory and Shayam Dutt Lohani, clerk of the godown indicated clandestine removal of 131 MT SS billets involving duty of Rs. 39,34,861/-, Shri Prabhat Kumar pleaded that this allegation is based on internal private records maintained for internal control and statements of certain persons, that cross examination of the persons whose statements have been relied upon has not been allowed and therefore the same have to be discarded, that merely on the basis of internal records maintained for internal control, the duty cannot be confirmed when entries in those records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's contention is that they have enclosed a copy of the show cause notice dated 21.3.2000 in the course of enquiry and the same had also been submitted in reply to the show cause notice. We are of the view that the Commissioners findings on this point are not sustainable at all and we are prima facie of the view that there is overlapping of duty demand to the extent of Rs. 11,15,22,355/- between show cause notice dated 1.5.2002 and earlier sow cause notice dated 21.3.2000 and this amount is excluded the remaining amount of duty demand would be Rs. 15,09,94,327/-. 8. Another major objection of the appellants counsel is that the extended period is not invokable in respect of show cause notice dated 1.5.2002 as on the basis of the same set of facts and same allegation, the department has earlier issued show cause notice dated 21.3.2000 for demand of duty for the period December, 1995 to January, 1999. and in this regard, reliance is p laced on the apex court judgement in the case of Nizam Sugar Factory vs. CCE, AP-2006 (197) ELT 465 (SC). We find that in the present case, duty demand is based on that - (a) chromium content of SS billets/flats manufactured during the period of disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SS billets/floats has been taken as 13.85%. From this we are prima facie of the view that the duty demand is based on estimated production of SS billets/flats which has been determined on the basis of a series of assumptions. There does not appear to be any cogent basis for these assumptions. The apex court in the case of Oudh Sugar Mills Ltd. vs .Union of India-1978 (2) ELT J-172 (SC) has held that allegation of under reporting of production of clandestine removal of sugar on the basis of average percentage sugar recovery from sugar cane is not sustainable without tangible evidence of clandestine removal. In our view, the ratio of this judgement is squarely applicable to the facts of the present case. In this regard, we also find that no chemical test has been conducted to ascertain chromium content of SS billets or chromium content of Ferro chrome. There is also no basis for taking the recovery percentage of chromium from ferro chrome as 91.33% while in the earlier show cause notice dt.21/3/2000 recovery percentage of chromium from ferro chrome had been taken as 75%. Prima facie, the duty demand based on such arbitrary assumptions would not be sustainable. 10. Ld.DR points out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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