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CCE, Indore Versus M/s Magnum Steels Limited, M/s B.R. Associates Pvt. Ltd., M/s I.R.S. Industries Pvt. Ltd., I.C. Jindal, Director, R.C. Sharma, Ashok Maheshwari, Virbhuti Gupta, Arvind Agrawal, Ajay Bhardwaj, Director

Evasion of excise duty - clandestine removal of goods - alloys and non-alloy steel ingots - demand of duty with imposition of penalties - norms as per Rule 173E - serious inconsistencies in the entries as well as the purported meter reading for electricity. The meter reading as on 27.04.1999 was shown higher than the meter reading later given by the electricity department in their monthly bill as on 30.04.2016 - Held that: - production based on estimation basis without any corroboration cannot b .....

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r demand based on such purported excess production of raw material cannot stand. Further, we also note that average consumption of electricity was worked out in respect of M/s Magnum Steels Limited based on the consumption of particular period. The respondents contended that if average has to be worked out of the consumption the data should be taken for the entire year. In that case the average consumption will get altered and the calculation of alleged excess production will not be sustainable. .....

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against the assessee is full of presumptions and projection with unexplained gaps in analysis of facts which are too many too gloss over. We find that to arrive at a contrary conclusion other than the one arrived by original authority we are not presented with sufficient supportive evidence in the appeals by the Revenue - appeals dismissed. - Excise Appeal No. 3004 to 3012 of 2005 - Final Order Nos. 54089 54097/2016 - Dated:- 17-10-2016 - Dr. Satish Chandra, President And Shri B. Ravichandran, .....

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investigations were started by the department in April, 1999. On completion of the investigation a show cause notice dated 20.04.2000 was issued to three main manufacturing assessees to demand Central Excise duties and to impose penalties. The case was adjudicated and the Commissioner vide the impugned order dropped all proceedings against all the noticees. The conclusion of the original authority is as below: In view of the above discussions, it is clear that concerning none of the noticees, it .....

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consumption of electricity for a few days has been challenged by the Noticees. The average consumption of electricity for a few days has been extrapolated and applied to a considerable larger period of time. No norm was fixed under Rule 173E but an air has been made about this. Only a part of the documents/ statements have been relied upon which is against the established principles of law. All these infirmities leave me with no option but to hold that the charges of clandestine manufacture and .....

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(b) There are cases of electricity theft booked by MPSEB against these units on 01.10.1999. This supports the department claim for suppression of production. (c) The duty calculation was made based on electricity consumption based on production of private records maintained by Sh. R. C. Sharma from 01.04.1999 to 24.04.1999. The detailed production was accordingly fixed and duty demand for the impugned period was calculated. (II) CASE AGAINST M/S I. R. INDUSTRIES PVT. LIMITED: (a) The private rec .....

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entire production of alloy steel ingots by the above two units were received by this unit and accordingly there was unrecorded excess production by M/s Magnum Steel Limited. (b) The completion of ingots into flat was calculated at the ratio of 90% and the total duty demand was arrived at based on clandestinely received ingots from the above two units who manufactured and clandestinely cleared these ingots. (c) The diary maintained by Sh. Arvind Agarwal, Authorised Signatory shows unaccounted cl .....

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s of Rule 173E is not correct. The determination of duty as proposed in the show cause notice was based on evidences collected and not based on Rule 173E. 4. We have heard ld. AR for the Revenue and ld. Counsel for the respondent-assessees. We have also perused appeal records including written submissions made by Revenue as well as by the respondent. The case of the department is mainly based on a handwritten chart recovered from Sh. R.C. Sharma who was present in the factory premises of M/s B. .....

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n of these two units were sold to M/s Magnum Steel Limited, the case against M/s Magnum Steels Limited was made for unaccounted manufacture and clearance of items made out of such inputs received from these two units. 5. In the written submissions made by the respondents each one of the grounds of appeal have been contested and comments given by the respondent. 6. We have carefully perused the grounds of appeal and the findings of the original authority. The main basis of the proceedings against .....

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e purported meter reading for electricity. The meter reading as on 27.04.1999 was shown higher than the meter reading later given by the electricity department in their monthly bill as on 30.04.2016. Further, we also note that the actual status of Sh. R.C. Sharma has not been brought out by the department. The respondents have produced evidence that he is not on employment with them during the material time. Further, even in the chart the figures were selectively taken in respect of different re .....

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show cause notice the basis of calculating the quantum of duty was mentioned as provisions of Rule 173E. Even if it is considered that Rule 173E was referred to only for the calculation purpose for arriving at the duty demand, we note that various parameters are to be considered to fix the norm. Parameters like installed capacity of the factory, raw material utilisation, labour employed, power consumption and other relevant factors are to be considered. In the present case as pointed out by the .....

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entioned by the Revenue in their submission. Both sides were not in a position to give any satisfactory factual information on this aspect. Ld. Counsel for the respondent informed that the cases are pending in the Hon ble High Court of Madhya Pradesh. No further details are available with both the sides. Hence, we are not able to form any opinion regarding corroboration of possible higher usage of electricity illicitly by the respondent. 8. We find the observation of the original authority on th .....

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t the demand, only 24/27 days of production written on a piece of paper recovered from a person who has been disowned by the noticee No. 2 & 3, can not be taken as a proof. As regards, the electricity consumption it depends upon the line losses, efficiency of panels etc. Moreover, at the most, if one month consumption was to be taken, this could have been somewhere during the middle of the period. Also, with the passage of time the efficiency of electrical/ mechanical instruments tend to dec .....

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for about two years in respect of the third respondent. Such extrapolation of small base data (even if such data is considered authentic) is not legally sustainable. 10. Regarding installed production capacity of M/s B. R. Associates Pvt. Limited and M/s I.R.S. Industries Pvt. Limited, the factual dispute has been examined by the original authority in respect of M/s B. R. Associates Pvt. Limited. The furnace crucial itself is only 2.5 MT whereas the projected production for duty demand was fixe .....

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at the other two manufacturers respondents have clandestinely manufactured ingots which were received by M/s Magnum Steels Limited for clandestine manufacture and clearance of their final product. We note that when the case of manufacturer suppliers of ingots itself has not been supported with adequate evidence further demand based on such purported excess production of raw material cannot stand. Further, we also note that average consumption of electricity was worked out in respect of M/s Magnu .....

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