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2016 (9) TMI 228 - CESTAT NEW DELHI

2016 (9) TMI 228 - CESTAT NEW DELHI - 2016 (341) E.L.T. 457 (Tri. - Del.) - Demand and imposition of penalty - clandestine removal of goods - each B.P Sets is used for each heat, thus the number of B.P.sets used in a day reveals the number of heats materialized - suppression of 5435.934 MT of M.S. Ingots - wherever information of B.P. sets is not available in Daily store report, the data of issue of silico magnese and Ferro Silicon available in the issue register has been considered for calculat .....

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pacity of the furnace is 6 MT. In that case, the log sheet appears to be contrary to his statement and if the department had any doubt, they should have conducted practical test of the heat. No actual practical test was conducted to ascertain the capacity of the furnace which was the easiest thing to do. Further, the purchase invoices clearly show that the capacity of furnace is 6 MT each. We therefore, find that there is no force in the allegation that the capacity of furnace is 7.9.MT. Even th .....

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accept this logic made by the revenue for the reason that the consumption of consumables cannot be a criteria to determine the production of goods. It would be more farfetched imagination to assume that only on the basis of use of consumables, which is a refractory material in multiple piece and prone to breakages/ defect, can be ground to allege clandestine production and clearance of goods. Further no practical test of its use has been carried out. In this case, reliance has been placed on use .....

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ula was set aside and we find that the judgment is applicable in the present case. Further, the most important aspect for alleging clandestine removal is that there has to be extra consumption of major raw material which are Sponge Iron and Pig Iron and their production. Even there is no evidence of a single consignment cleared from the Appellant's unit without payment of duty. No buyer or transporter of alleged suppressed production has been brought on record. Nor any evidence in the form of re .....

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al of goods. - We accept the contention of Appellant that no practical test was conducted to ascertain the actual consumption coupled with fact that the consumption of electricity is not the criteria to allege clandestine removal. Moreover, it is not knows as to from where the consumption of 911 units and industry average of 850 MT has been derived. In the case of CCE, MEERUT-I Versus R.A. CASTINGS PVT. LTD. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT] as upheld in COMMISSIONER Vs. R.A. CASTING .....

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s Unit in the year 2003 on the ground that the same pertains to amount of clandestine clearances made by the Appellant. We find from the appeal memo that such investments were properly explained and pertain to subscription of shares in Appellant's company. In such a case, there is no reason to link said amount with clandestine clearances. Even assuming to be so, we find that the investment pertains to the year 2003, whereas in the present case, the period involved is 2005. Thus, there is no reas .....

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016 - Mr. S. K. Mohanty, Member ( Judicial ) And Mr. R. K. Singh, Member ( Technical ) For the Appellant : Mr. Rupendra Singh, Advocate For the Respondent : Mr. G. R. Singh, D.R. ORDER Per S. K. Mohanty Both these appeals have been filed against the impugned order dated 28.05.2009 passed by the Commissioner, Central Excise, Raipur, wherein duty demand of ₹ 1,50,97,991/- was confirmed against M/s Balajee Structurals (India) Pvt. Ltd. with imposition of equal amount of penalty. Besides, pena .....

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isable goods namely, B.P. Sets (Bottom Pouring Sets) of different sizes, silico manganese, Ferro Silicon, Aluminium etc., which are for exclusive use in Induction furnace. The panchnama was prepared by the officers in presence of Shri J.P.Agarwal. On the basis of verification of documents/records, the Department issued the show cause notice dated 01.11.2008 to the appellants. It was alleged that each B.P Sets is used for each heat, thus the number of B.P.sets used in a day reveals the number of .....

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ppression of 5435.934 MT of M.S. Ingots during the said period. It was also alleged that on the day when the use of B.P.Sets was not found, the use of Silicon Magnese and Ferro Silicon in production was considered. Thus multiplying the number of times the said items were issued, the same was multiplied with the capacity of furnace i.e 7.90 MT and it was alleged that the Appellant's unit has suppressed 380 MT of production of M.S. Ingots. It was further alleged that the consumption for per to .....

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2009 (for short, the "impugned order"), in confirming the proposals made therein. The impugned order has confirmed the demand on the following grounds:- (i) That B.P. Sets is used for each heat. The number of B.P.Sets issues/ used in a day reveals the number of product heats materialized during that day. So the daily reports showing quantity/ number of B.P Sets in different sizes issued reveals the number of product heat materialized and therefore specific size of ingots produced from .....

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asis of B. P. Sets issued/ used during a day as reflected in Daily store report to be of 7.90 MT per heat, it is clear that there is suppression of 5435.934 MT of M.S. Ingots for the period 01.03.2005 to 17.07.2005. (iii) That wherever information of B.P. sets is not available in Daily store report, the data of issue of silico magnese and Ferro Silicon available in the issue register has been considered for calculation of heat materialised . From these figures, the production suppressed was of 3 .....

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fractory material, are prone to breakages during transportation, handling and during the use. They come into multiple pieces and even if there is slight defect in one piece or it breaks during fitting, the whole set becomes obsolete. That in the statement of Shri J.P.Agarwal, he has clearly stated that 1 to 4 B. P. Sets are used in each heat. Nowhere in his statement, he has accepted that one B. P. Sets is used in each heat. He further submits that the log sheet for 16.07.2005 and 17.07.2005 can .....

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s reliance upon the judgment of AMBIKA CHEMICALS Versus CCE, CHENNAI 2002 (148) E.L.T. 101 (Tri. - Chennai) as upheld in 2003 (153) E.L.T. A298 (S.C.), to justify his stand that demand cannot be made on the basis of Note books maintained by the employee as the same is not supported by evidence with regard to purchase of inputs, production, source of funds, sale and receipt of consideration. Similarly he relies upon judgment of Tribunal in case of CCE, CHANDIGARH Vs. ARSH CASTINGS (PVT.) LTD. 200 .....

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ence. There is no evidence on record to show the excess procurement of the raw material, manufacture of goods which were cleared without payment of duty and excess consumption of electricity etc., in absence of this evidence demand is not sustainable. 4.1 He submits that even if it is assumed that the private note book or record show some production, but in absence of identification of author and any evidence of clandestine removal, no demand can be made. He also relies upon the following judgme .....

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RI) 4.2 He submits that no practical test was conducted to ascertain the capacity of Induction furnace or the use of B.P. Sets in production. That the B.P. Sets is consumable and not raw material. That there is no evidence of receipt of any excess major raw materials namely, sponge iron and Pig Iron. He referred to paragraph 4 in the show cause notice, wherein, during physical verification no discrepancy was found either in stock of raw material and finished goods, which clearly shows that the a .....

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on the judgment in the case of M. VEERABADHRAN Vs. CCE EXCISE, CHENNAI-II 2005 (182) E.L.T. 389 (Tri. - Chennai) as upheld in COMMISSIONER Vs. M. VEERBADHRAN 2006 (197) E.L.T. A34 (S.C.). He also submits that no practical test of consumption of electricity has been done. The allegation of use of 911 Unit per MT is not based upon practical test nor the industry average of 850 Unit per MT is supported by any evidence as the consumption of electricity depends upon the use of raw material, their qua .....

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hat even these investments were made in the year 2003, which has been accepted in the show cause notice and the present case relates to the year 2005, it cannot be said that the amount towards alleged clandestine production and removal was received in the year 2003. He submits that this clearly shows that the allegation against the Appellant are without any basis and reasoning. He further submits that without accepting that the seized records depict production capacity, even if it is assumed so, .....

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on of penalty. 6. We have gone through the case records and considered the submissions made by both the sides. 7. We find that the demand has been confirmed based on the log sheet of 16.07.2005 and 17.07.2005, indicating that the average production of MS Ingots is 7.9 Mt per heat. However, we find that no person has been identified as author of such log sheets. The only statement recorded is of the Chemist, Shri Ketki, who had stated that it pertains to production. However, we find that Shri Ket .....

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inted out that even Shri Ketki in his statement had stated that the capacity of the furnace is 6 MT. In that case, the log sheet appears to be contrary to his statement and if the department had any doubt, they should have conducted practical test of the heat. No actual practical test was conducted to ascertain the capacity of the furnace which was the easiest thing to do. Further, the purchase invoices clearly show that the capacity of furnace is 6 MT each. We therefore, find that there is no f .....

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Sets means the number of heat materialized. We are not inclined to accept this logic made by the revenue for the reason that the consumption of consumables cannot be a criteria to determine the production of goods. It would be more farfetched imagination to assume that only on the basis of use of consumables, which is a refractory material in multiple piece and prone to breakages/ defect, can be ground to allege clandestine production and clearance of goods. Further no practical test of its use .....

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2006 (197) E.L.T. A34 (S.C.)., the demand based on formula was set aside and we find that the judgment is applicable in the present case. Further, the most important aspect for alleging clandestine removal is that there has to be extra consumption of major raw material which are Sponge Iron and Pig Iron and their production. Even there is no evidence of a single consignment cleared from the Appellant's unit without payment of duty. No buyer or transporter of alleged suppressed production ha .....

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TS & CHEM. LTD. Vs .CCE, HYDERABAD 2005 (191) E.L.T. 1062 (Tri. - Bang.), CCE, MEERUT Vs. RAMAN ISPAT (P) LTD. 2000 (121) E.L.T. 46 (Tribunal), CCE, COIMBATORE Vs. SANGMITRA COTTON MILLS (P) LTD 2004 (163) ELT 472 (Tri-Chennai) are on the ground that in absence of any evidence of clandestine removal, demand cannot be made merely on the basis of private records and registers. We agree with the submissions and judgments cited by the Appellant and hold that the demand on the basis of log sheet .....

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is 911 Units per MT, whereas the Industry average is 850 MT. We accept the contention of Appellant that no practical test was conducted to ascertain the actual consumption coupled with fact that the consumption of electricity is not the criteria to allege clandestine removal. Moreover, it is not knows as to from where the consumption of 911 units and industry average of 850 MT has been derived. In the case of CCE, MEERUT-I Versus R.A. CASTINGS PVT. LTD. 2011 (269) E.L.T. 337 (All.) as upheld in .....

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