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2015 (11) TMI 1476 - CESTAT NEW DELHI

2015 (11) TMI 1476 - CESTAT NEW DELHI - TMI - Waiver of pre deposit - Exemption under Notification No. 6/02-CE - Use of fly ash more than 25% - The Department's contention is that the pipes in respect of which the exemption under Notification No. 6/02-CE dated 1/3/02 (Sl. No. 158) has been availed either do not contain fly ash or the fly ash content is much less than 25% and, hence, the same do not qualify for exemption - retraction of statements - Held that:- Though, the appellant plead that un .....

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ts, there would be transportation cost involved, besides the cost of loading at the Thermal Power Plants and also the cost of storage in the appellant company's factory which may involve constant spraying of water. In absence of data regarding transportation cost, loading cost and unloading and storage cost, the plea that fly ash is absolutely free and therefore there would be no incentive not to use it to the extent permitted, cannot be examined.

Undue hardship to the assessee would .....

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2208 and 2304-2306 of 2012 - Misc. Order No. 51180-51182/2015 - Dated:- 6-4-2015 - Shri Rakesh Kumar, Member (Technical) And Shri S.K. Mohanty, Member (Judicial) For the Petitioner : Shri V. Lakshmi Kumaran, Advocate For the Respondent : Shri Pramod Kumar, Authorized Representative (Jt. CDR) ORDER Per. Rakesh Kumar :- The facts leading to filing of these appeals and stay applications are, in brief, as under. 1.1 M/s A. Infrastructure Ltd., Hamirgarh, Bhilwara (Rajasthan) [formally known as Shree .....

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format prescribed by the Commissioner and furnishing a monthly return to Assistant Commissioner, in this regard in a prescribed format. According to the appellant company, during the period from December 2003 to March 2006 they were using fly ash more than 25% by weight in the manufacture of the said pipes and on this basis they were availing all the exemption, mentioned above and according to them during this period, they were procuring the fly ash from Kota Super Thermal Power Plant and Suratg .....

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the time of officers visit to the factory, there was scuffle between the officers and the employees of the appellant company in which many officers were injured and in this regard the Department filed an FIR with the Police as a result of which some workers of the appellant company were arrested. According to the Revenue, since the appellant companys employees did not allow the officers of DGCEI to conduct investigation at their end, the officers conducted investigation at the end of the suppl .....

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nd those transporters stated that they have never transported the fly ash to the appellants factory. The statement of 93 truck owners whose trucks were being used by the transporters were also recorded wherein they stated that no fly ash had been transported. It is on this basis that after issue of show cause notice, the Commissioner by the impugned order-in-original dated 30th March, 2012 denied the exemption under Notification No. 6/02-CE to the appellant company and confirmed the duty demand .....

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penalty under Rule 26 of the Central Excise Rules, 2002 of ₹ 10,00,000/- on Shri V.K. Gupta, Chief General Manager of the appellant company. Penalty of ₹ 5,00,000/- on Shri Darpan Jain, Proprietor M/s Kaka Roadlines, Kota, penalty of ₹ 5,00,000/- on Shri Parasmal Mehta, Proprietor of M/s Robin Roadways, Bhilwara and penalty of ₹ 5,00,000/- on Shri Jai Kumar Singhvi, Proprietor of M/s Sanghvi Transport, Nimbahera, Rajasthan was also imposed under Rule 26 of the Central Ex .....

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o. 56018-56023/2013 dated 04/02/13 by which the Tribunal directed the appellant company to pre-deposit an amount of 50% of the duty demand confirmed against them within a period of 12 weeks from the date of this order. Subject to the pre-deposit of the above amount by the appellant company, the requirement of pre-deposit of balance amount of duty demand, interest and penalty by the appellant company and the requirement of pre-deposit of penalty by other appellants would stand waived and its reco .....

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ther in terms of the order dated 29/4/13 of Honble Rajasthan High Court the said matter was to be heard afresh including the issue on merits or was to be re-considered only in respect of financial hardship which has been pleaded by the appellant before the Honble High Court, the Tribunal vide order dated 30th June, 2014 directed the appellant alongwith the Department to seek a clarification in this regard from the High Court. The applications in this regard were filed by the appellant before H .....

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on was also preferred seeking stay of the demand and waiver of deposit of duty to the tune of ₹ 11,02,12,141/-. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) by its order dated 4/12.2.2013 disposed of the stay application with a direction to the petitioner to pay 50% of the confirmed duty within a period of 12 weeks as pre-condition for waiver of balance duty and the penalty. Being aggrieved by the order dated 4/12.2.2013 the petitioner preferred a petition for writ (DB C .....

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or hearing before the CESTAT on 30.6.2014. The matter was adjourned as parties to the proceedings made a prayer to have clarification from the High Court as an objection was raised by the departmental representative that the Tribunal was required to examine plea of financial hardship only while examining the application afresh. The appellant petitioner on the other hand emphasised that they are at liberty to refer merits of the case also. By instant application a clarification of the order dated .....

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pre-deposit. From perusal of the order dated 29.4.2013 it is apparent that a permission was granted to the petitioner to withdraw the petition for writ preferred to challenge the order pertaining to waiver of condition of pre-deposit as per Section 35-F of the Act of 1944. The order in itself quite unambiguous and as such does not require any clarification. The CESTAT is supposed to dispose of the application afresh in accordance with law by keeping in view provisions of Section 35-F of the Act .....

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e appellant in accordance with the exemption Notification No. 6/02-CE dated 1/3/02 (Sl. No. 158) had procured fly ash from Kota Thermal Power Statino and Suratgarh Thermal Power Plant and had used the fly ash to the extent of more than 25% in the manufacture of AC Pressure Pipes and as per the condition of the exemption notification, the appellant had maintained record of the receipt and use of the fly ash in the prescribed format and had also been regularly filing the returns regarding the rece .....

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al statements have denied having transported fly ash for the appellant company, Shri Darpan Jain under his letter dated 30th June, 2008 to the Chairman, CBEC and Shri Parasmal Mehta of M/s Robin Roadways under his letter dated 12/2/08 to the Finance Minister have retracted their statements, that in any case, since cross examination of the transporters had not been allowed in spite of specific requests having been made for the same, no reliance can be placed on their statements, that for the same .....

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90% of the fly ash generated in the power plants is stored at fly ash pond, where it is constantly sprinkled with water, only 10% fly ash is stored in silos in the dry form, that no inquiry had been made with the officials of the Kota Thermal Power Plant at the fly ash pond, that in response to the appellants application dated 09/4/14 to Superintendenting Engineer, Kota Super Thermal Power Station, under RTI Act, Kota Thermal Power Station vide letter dated 23/4/14 has informed that since durin .....

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f. April 2005, the weighment of the trucks loaded with fly ash was started at M/s Shri Nath Computerised Dharamkanta, Chitorgarh, Hamirgarh, that calculations regarding fly ash percentage in the AC Pressure Pipes during 2005-2006 are wrong, as the fly ash percentage in the final products has been calculated on the basis of standard weight chart and computation of percentage of fly ash worked out by the Department in relation to pipes manufactured using Magnani Technology is incorrect, since the .....

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T. of cement shown during 2005-2006, 19882.064 M.T. of cement was consumed in Ahmedabad unit of the appellant, which started commercial production in 2005-2006 only and the remaining quantity of cement was used in the Bhilwara Unit to which this dispute pertains, that no adverse conclusion can be drawn from the incident of violence at the time of search of the appellant factory, as the search has been conducted through out the night and the next day, without allowing the workers to leave the fac .....

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ely based on statements of various persons recorded by the Department statement of two Assistant Engineer of Kota Power Thermal Plant, statement of proprietors and employees of Dharamkanta and the statements of the transporters and various truck owners and since their cross examination has not been allowed, no reliance can be placed on those statements, that as regards the discrepancy between the records of Dharamkanta and of the appellant, the appellant started getting the fly ash weighed at th .....

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acing serious financial crises, that since the appellant have strong prima facie case in their favour and since the appellant are facing serious financial crises, the requirement of pre-deposit of the duty demand, interest and penalty by the appellant company may be waive for hearing of the appeals and recovery thereof may be stayed. 4. Shri Pramod Kumar, the learned Jt. CDR, opposed the stay application by reiterating the findings of the Commissioner in the impugned order and pleaded that bulk .....

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ents of Shri Mahmood Ahmed, Assistant Engineer (ash handling and maintenance) and of Shri Vinod Kumar Agarwal, Assistant Engineer (CA-II) of the Kota Thermal Power Plant had been recorded, that it is clear from the statements of these two officials of Kota Thermal Power Plant, that they were responsible for the maintenance of ash handling plant and the ash dyke also, which contains slurry, that it is absolutely wrong to say that these two Assistant Engineers had no information about the lifting .....

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that beside this, statements of 93 truck owners had also been recorded and each of them has denied having transported any fly ash for the appellant company, that while the appellant claim to have transported fly ash from Kota to their factory at Bhilwara situated distance of about 200 km. in the open trucks which is not possible, as the fly ash would dry up, that at the time of visit of the Investigating Officers to the appellants factory on 09/3/06, the appellants employees had resisted the .....

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even the truck numbers and consignors were different, that during 2005-2006, as per the balance sheet of the appellant company, total pipes manufactured without using fly ash were 9411.8 M.T. in which the cement of the same quantity was used and total cement used during 2005-2006 was 55,965 M.T. which implies that 46,554 M.T. of cement was used in the manufacture of the AC Pressure Pipes which are supposed to be containing 25% or more of fly ash by weight, that the AC Pressure Pipes manufactured .....

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he appellant company has not used fly ash to the extent of 25% or more by weight of the AC Pressure Pipes manufactured by them and have fraudulently availed the benefit Notification No. 6/02-CE, that when the appellant have falsified their books of accounts, can be attached to them no creditability profit and loss account and, hence, the appellants plea regarding severe financial problem is not acceptable and that in view of the above, this is not the case for waiver from the requirement of pre .....

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he Central Excise Tariff made by using not less than 25% by weight of fly ash or phosphor gypsum or both subject to condition that the assessee maintain a record of receipt and use of the fly ash in the format prescribed by the Commissioner and also file a monthly statement to the Jurisdictional Central Excise authorities regarding receipt and consumption of the fly ash. There is no dispute that the appellant were not availing of this exemption in respect of the AC Pressure Pipes made without th .....

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158) has been availed either do not contain fly ash or the fly ash content is much less than 25% and, hence, the same do not qualify for exemption. In this regard though there is no dispute that the appellant had maintained the records regarding receipt and consumption of fly ash as prescribed by the Commissioner and were also filing monthly returns regarding receipt and consumption of fly ash, the Departments contention is that these records are false. 7. The evidence relied upon by the Depar .....

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sh slurry which is pumped in ash dyke (also known as ash pond) which contain ash slurry and that during 2003-2004 to 2005-2006 the appellant company has not lifted any fly ash from fly ash plant to Kota Thermal Power Plant ; (2) Statement dated 08/2/08 of Shri Vinod Kumar Agarwal, Assistant Engineer, CA-II of Kota Thermal Power Plant, Kota recorded under Section 14 of Central Excise Act, 1944 wherein he stated that he looks after ash handling plant stage II, III and IV of Kota Thermal Power Plan .....

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ta slips. However, on inquiry with Shri Nath Computerised Dharamkanta slips produced by the appellant company have been found to be fake and as per the records of Shri Nath Computerised Dharamkanta, the weighment slips of the same numbers had been issued in the name of totally different parties ; (4) Statement of Shri Lila Ram Sabnani, owner of M/s Shri Nath Computerised Dharamkanta wherein after perusing and comparing the weighment slips submitted by the appellant company with daily weighment s .....

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transported any fly ash for the appellant company ; (6) Statements of Shri Paras Mal Mehta, Proprietor of M/s Robin Roadways, Bhilwara, Shri Darpan Jain, Proprietor of M/s Kaka Roadlines, Kota and statement dated 14/5/07 of Shri Jai Kumar Singhvi, Proprietor of M/s Singhvi Transport Company wherein they stated their transport companies have not transported any consignments of fly ash from the Thermal Power Plants to the appellant s factory as against which the appellants claim is that the fly a .....

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es with the use of fly ash would be 46553.754 (55965.554 9411.08). As per the data provided by Shri V.K. Gupta of the appellant company, the AC Pressure Pipes manufactured by using fly ash during 2005-2006 was 53995 M.T. Thus, it appeared that during 2005-2006 46553.754 M.T. of cement had been used for manufacture of 53995.6 M.T. of Asbestos Cement Pipes with fly ash and accordingly the percentage of fly ash in such pipes would be 13.78% ; (8) Shri Sanjay Kumar Kanoria, Managing Director of the .....

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d of dispute, since there is no provision of sale of fly ash and anybody could lift fly ash, no records in this regard and hence the statements of the Assistant engineers are without any basis. Accordingly, the contention of the appellant is that the statements of Shri Mehmood Ahmed and Shri Vinod Kumar Agarwal, Assistant Engineer of the appellant company have no evidentiary value. 8.1 Another plea of the appellant is that since the statement of Shri Darpan Jain of M/s Kaka Roadlines and of Shri .....

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ta slips is only in respect of 197 slips for period from November 2005 to March 2006 and (3) FIR lodged by the Department against the employee of the appellant company of having obstructed the search has been dismissed by the Judicial Magistrate. 9. We find that Shri Parasmal Mehta of M/s Robin Roadways, Shri Darpan Jain of M/s Kaka Roadlines and Shri Jai Kumar Singhvi, Proprietor of M/s Sanghvi Transport in their respective statements had clearly stated that no fly ash had been transported by t .....

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se circumstances, at this prima facie stage, it cannot be said that the statements of Shri Darpan Jain, Shri Parasmal Mehta and Shri Jai Kumar Sanghvi are all doubtful value and that denial of their cross examination has initiated the proceedings. However, as regards the statements of two Assistant Engineer of Kota Thermal Power Plant, in view of information given by the Power Plant to the appellant under RTI Act, stating that during the period of dispute no records regarding lifting of fly ash .....

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screpancy in relation to 197 weighment lips for the period from November 2005 to March 2006 and the total duty involved in respect of the same is ₹ 1,95,62,727/-. 11. From the findings of the Commissioner in para 27 of the impugned order it appears that during 2005-2006, the appellant used 9411.8 M.T. of cement for manufacture of AC Pressure Pipes containing only cement and not containing fly ash, while 46553.754 M.T. of cement had been used for manufacture of 53995.600 M.T. of Asbestos Ce .....

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een produced. In any case, this point can be examined only at the stage of final hearing. 12. Though, the appellant plead that under the law, the appellant could use fly ash upto 40% in manufacture of AC Pressure Pipes and since the fly ash is free, while cement is much costlier, there was absolutely no incentive for the appellant company to use cement instead of fly ash. But fly ash is free only for those users who are located in close vicinity of the source of fly ash. For the appellant compan .....

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would be no incentive not to use it to the extent permitted, cannot be examined. 13. In view of the above discussion, it cannot be said that the Departments case against the appellant is absolutely without any basis and that the appellant have very strong prima facie case in their favour. Under Section 35F of the Central Excise Act, 1944 waiver from the requirement of pre-deposit is to be granted on the basis of twin considerations whether the requirement of pre-deposit would cause undue hardsh .....

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asis of the twin consideration of undue hardship and safeguarding the interest of Revenue, this is not the case which would merit total waiver from compliance with the provision of Section 35F. 14. The appellant, however, have pleaded financial hardship and in this regard they had enclosed the balance sheet for 2013-2014. According to the appellant there was decline in net profit of the appellant company during the half year ended 30th September 2014 and that as on 30th September 2014 the appell .....

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