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Commissioner of Central Excise & S. Tax, Ranchi Versus Bihar Foundry and Costing Ltd.

2016 (4) TMI 543 - CESTAT KOLKATA

Demand of differential duty - Clandestine removal of goods - Whether the Mill Scale Scrap / burning losses, claimed by the Respondent with respect to conversion of M.S. Ingots to M.S. bars got done from the job workers, is correct or the same should be in the range of 1 to 3% - Held that:- There is no evidence on record that any consignment of M.S. Bars, got manufactured from the job workers, was clandestinely diverted by the Respondent. The % age of Mill Scale Scrap / Loss has been clearly refl .....

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The same can also not be considered as sufficient evidence to demand differential duty from the Respondent.

As per the above observation and by relying upon the decision of this bench in the case of CCE Calcutta-II Vs. Murttiwyn Industrial corp. [1995 (5) TMI 152 - CEGAT, CALCUTTA], a charge of clandestine removal can not be said to be established merely on the basis of presumption that normal Mill Scale Scrap / loss is in the range of 1 to 3%. In the absence of any such positive evi .....

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l has been filed by the Revenue against OIA No. 64/RAN/2013 dt 12/4/2013 passed by Commissioner (Appeals) Ranchi as first appellate authority. 2. Sh. A. Roy Supdt (AR) appearing on behalf of the Revenue argued that appellant is getting M.S. Bars manufactured from its job workers by supplying M.S. Ingot. That Mill Scale Scrap originated during job work has been claimed to be from 4.01 to 10.01% during the period 2006-07 to 2008-09 which should have been normally in the range of 1 to 3 % as held b .....

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much as department is not required to prove its case with mathematical precision. 3. Sh. Saurabh Bagaria (Advocate) & Sh. Partha Banarjee (Advocate) appeared on behalf of the Respondent. Sh. S. Bagaria (Advocate) during the course of hearing & written submissions argued that department is not able to give any scientific authority as to how Mill Scale Scrap / burning loss should always be in the range of 1 to 3 %. That by a letter dt 17/2/2009 Project Management cell of Ministry of Steel .....

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by his client were duly accounted for by Annexure 6 Job worker challans which clearly indicated Mill Scale Scrap generated in each processing. That raising a demand on a presumption, that such mill scale scrap / loss is only to the extent of 1 to 3%, is not borne out by any evidence. Learned Advocate relied upon the following case laws on the subject & on the aspect that clandefine removal can not be established an the basis of assumptions:- (i) 2007 (217) ELT 469 (T) (Narbada Steels Limite .....

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t be made applicable. That the case law of CCE Vs. D. Bhoormul (Supra), relied upon by the Revenue, is not applicable on facts & law because in that case department had discharged initial onus of clandestine activity. That in the present case demand is purely on an assumption that Mill Scrap / loss has to be in the range of 1 to 3% without any evidence. 4. Heard both sides & perused the case records. The issue involved in the present proceeding is whether the Mill Scale Scrap / burning l .....

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t certain modifications, interalia, in term of using pulverized coal technology instead of old coal based technology. Accordingly the modifications were made by the job worker and the mill scale scrap / loss generation has shown gradual decrease from 10. 01 to 4.01% during the period 2006-07 to 2009-10 There is no evidence on record that any consignment of M.S. Bars, got manufactured from the job workers, was clandestinely diverted by the Respondent. The % age of Mill Scale Scrap / Loss has been .....

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evidence of clandestine manufacture & clearance of M.S. Bars. The same can also not be considered as sufficient evidence to demand differential duty from the Respondent. 4.1 Above view taken also gets fortified by the case law of this bench in the case of CCE Calcutta-II Vs. Murttiwyn Industrial corp. [1995 (80) ELT 708 (Tribunal)]. In the case while rejecting the appeal filed by the Revenue, following observations were made by this bench in Para-9:- 9. The appeal does not succeed, however, .....

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n various factors like the material used product made, the process, power supply including breakdown etc. merely because the losses were reported around 10% it cannot be held that such figures did not represent the correct position and that the inputs were not accounted for. Moreover, the normal quantum of losses as per the enquiries conducted is reported to be in the range of 5% to 8%. There is no reason indicated, why the minimum level has been applied and excess thereabove disallowed. The met .....

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