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M/s. Balajee Structurals (India) Pvt. Ltd., Shri J.P. Agarwal, Commercial Executive Versus C.C.E., Raipur

2016 (9) TMI 228 - CESTAT NEW DELHI

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 calculation of heat materialised and from these figures, the production suppressed w .....

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trary 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 the capacity of the furnace cannot be a criteria to allege clandestine removal .....

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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 of Ferro Silicon and Silicon Maganese, we find that it is used in very smal .....

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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 receipt of consideration has been brought on record. We agree with the submiss .....

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est 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. CASTINGS PVT. LTD. [2011 (1) TMI 1302 - Supreme Court of India], SAVITRI CONCAST LT .....

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andestine 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 reason to hold that the said investments support the allegation of the revenue. .....

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echnical ) 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, penalty of ₹ 10 lakhs was also imposed on the Commercial Executive, Shri J .....

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ico 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 heats materialized. A chart was compiled on the basis of such issue. The off .....

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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 ton M.S Ingots in Appellant's unit is 911 units, whereas the industrial av .....

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s 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 each charge during that day. (ii) That though Shri Ketki, Chemist of factory .....

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ort 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 380.980 MT. The adjudicating authority also relied upon other records to show .....

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d 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 cannot be the criteria to allege that the capacity of furnace is 7.90 MT. That .....

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48) 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. 2006 (195) E.L.T. 302 (Tri. - Del.) as upheld in 2010 (252) E.L.T. 191 (H.P.) t .....

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aw 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 judgment in support of his contentions made above : (i) TGL POSHAK CORP. Vs. CCE, .....

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acity 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 allegations are without any basis. That only on the basis of use of refractor .....

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05 (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 quality and proportion of mix. He states that no demand can be made on electric .....

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ed 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, in that case also no demand can be made against the Appellant as there are .....

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ubmissions 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 Ketki did not name any person who has prepared such log sheets. Shri J.P.Agarwa .....

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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 the capa .....

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his 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 of Ferr .....

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d 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 receipt of conside .....

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, 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 or use of B.P. Sets or Ferro Maganeese and Silicomn Magnese are not sustaina .....

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