TMI Blog2016 (10) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... han that. Thus, there are varieties of report available in the markets, one could not have been chosen by the respondents, arbitrarily, without carrying out the experiment of consumption of electricity for one ton of manufacturing at the noticee's manufacturing unit. This type of experiment is a must by the department, whenever respondents are canvassing the ground of electricity consumption pattern vis-a-vis clandestine removal of finished products. Otherwise, without such experiment, if any one of the aforesaid report relied upon, then it is arbitrariness on the part of the respondents and whenever there is any arbitrariness, there is always violation of Article 14 of the Constitution of India because for few of the noticees such type of reports are not relied upon whereas for rest of the assessee, as per the choice of the respondents, such type of reports will be relied upon and in fact, this has happened in this case - Thus, without experiment is being carried out at the premises of the noticees, use of any of the committee's report for electricity consumption pattern always leads to arbitrariness on the part of the respondent-department. Whenever arbitrariness is present, equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual matrix: ● This writ petitioner is manufacturing M.S. Ingot from sponge iron and they are manufacturing M.S. Ingot since long. ● Show cause notice dated 26.09.2014 was given by the Commissioner, Central Excise and Service Tax, Ranchi for the period running from September,2009 to March-2014. ● First date of hearing was on 10.04.2015 i.e. after approximately 8 months and 10 days. Petitioner remain present but no hearing made. A letter dated 04.04.2015 already issued by the respondents fixing next date on 28.04.2015. ● On 28.04.2015, petitioner appeared but respondent no. 2 was not present, so no hearing took place. ● On 22.12.2015, the petitioner appeared and filed a letter requesting that documents upon which the reliance is placed in the show cause notice may be supplied to the petitioner. Few of the documents though are relied upon by the respondents in the show cause notice like Nucleus Group report and All India Induction Furnace Association report which were referred in the show cause notice and though they were demanded by this petitioner, the same were not supplied. ● On 13.01.2016, petitioner again requested to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are no less than one dozen judgments in which it has been observed right from the learned Tribunal to the Hon'ble Supreme Court of India that electricity consumption per se cannot be relied upon by the respondents for proving clandestine removal of final product, because there is no set pattern for consumption of electricity. There are several reports given by more reliable institutions and persons than Dr. N.K. Batra, which have been referred in the aforesaid decisions of R.A. Castings. Cross examination of Dr. N.K. Batra is also not made available, despite the request was made. The respondents ought to have carried out experiment of consumption pattern of electricity at the factory premises of the noticee, which has been referred to paragraph no. 22 of the decisions of R.A. Castings Private Ltd, which has not been gone into by the respondents. The whole show cause notice is based upon presumptions and surmises. The burden of proof lies upon the respondents that there is clandestine removal of finished product, which has not been discharged, at all, by the respondents. ● It is also submitted by the counsel for the petitioners that the respondents are surprised a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument has been canvassed, in the Order-in-Original and the first adjudicating authority has dropped the baseless notice and whenever the first authority has confirmed such ground, the tribunals have passed the Orders and quashed such ground, like in the case of R.A. Castings Pvt. Ltd Vs. CCE, which is approved by the Allahabad High Court and SLP has been dismissed by the Hon'ble Supreme Court. It is further submitted that whenever Order-in-Original are passed as stated herein above, dropping the show cause notice, the same are placed before the committee, consisting of two chief commissioners and they are taking decisions, whether to prefer any further appeal or not and all aforesaid cases where the show cause notice has been dropped and the ground of the electricity consumption pattern has also not been approved, in the Order-in-Original, no appeal has been preferred by the department. Thus, it has become fashion with the respondent that arbitrarily in few cases, ground of Dr. N.K. Batra will be raised for few industries and for rest of the industries, no such ground is ever raised. Because of this N.K. Batra's report, several petitions have been filed and several decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the petitioners, approximately for more than half dozen times, but, the petitioners had not filed any reply. Hence this Court may not interfere with the orders passed by the Commissioner, Central Excise and Service Tax dated 03.03.2016. REASONS 5. Having heard counsels for both the sides and looking to the facts and circumstances of the case, we, hereby, quash and set aside the Order-in-Original dated 03.03.2016 (Annexure-14 to the memo of this writ petition) mainly for the following facts and reasons: i. Show-cause notice was given by the respondents on 26.09.2014 for the period running from September, 2009 to March, 2014 mainly on the ground that there is unrealistic electricity consumption, high cost of production vis-a-vis income from sale, unrealistically low amount of expenditure towards salary of employees and though manufacturing activity incurs losses, still the petitioner no.1 unit continues and profit is shown in the books of account from non-core activities by manipulating books of account. On this ground, the show-cause notice has been given by the Commissioner, Central Excise and Service Tax, Ranchi. ii. In the show-cause notice, Dr. N.K. Batra&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Hence, his cross examination is must. His report is not a conclusive piece of evidence as per Indian Evidence Act, 1972. vi. Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like- (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records. (b) Manufacturing of finished product with the help of the aforesaid raw material, which is not mentioned in the statutory records. (c) Quantity of the manufacturing with reference to the capacity of production by the noticee unit. (d) Quantity of the packing material used. (e) The total number of the employees employed and the payment made to them. In this case, statements of the labourers ought to have been reduced in writing, by the department which ought to refer that over and above of the salary paid by the noticee, some other type of remunerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for any other purpose . 15. Under Article 226 of the Constitution , the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond that. Department has to bring its own experts at the factory premises of the noticee. Department must carry out an experiment of the consumption of the electricity at the manufacturing place of the noticee either for 1 MT or for 1000 unit etc. so that, the electricity consumption pattern can be measured for the very same machinery and thereafter it can be compared with the quantity of the finished products mentioned, in the books of accounts, with the electricity bills of the noticee. This exercise is must before issuing the show cause notice by the respondent-department ,whenever the department is levelling allegation of clandestine removal on the basis of electricity consumption pattern. Instead of doing this exercise, straight way, Dr. N.K. Batra's report has been relied upon, which has no relevance with the factory premises of the noticee. Hence, such report shall not be relied upon by the respondents, unless the aforesaid experiment is carried out at the factory premises of the noticee. This is not a first case in which such guidelines has been given. Observations made in paragraph Nos. 20.1, 20.2, 21, 22.1, 23 24 of the decisions rendered by the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. Therefore, there can be no generalization nor any uniform norm of 1046 units as sought to be adopted by the Revenue especially when there is no norm fixed under Rule 173E till date by the Revenue and notified by it. The electricity consumption varies from one unit to another and from one date to another and even from one heat to another within the same date. There is, therefore, no universal and uniformly acceptable standard of electricity consumption, which can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations. In the following case laws, it has been held that the consumption of the electricity alone is not sufficient to determine the production; (i) Pure Enterprises (P) Ltd. v. CCE, Rajkot- 1999 (111) E.L.T. 407 (Tri.) (ii) Kapadia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d demand based merely on assumptions and presumptions cannot, therefore, be sustained nor could be justified both on facts and in law. 24. The law is well settled that in every case of alleged clandestine removal, the onus is on the Revenue to prove what is alleges with positive and concrete evidence. In the absence of any positive evidence brought by the Revenue to discharge its onus, the impugned order cannot be sustained. (emphasis supplied) x. The aforesaid decision has been upheld by the Division Bench of Allahabad High Court in a decision reported in 2010(1) taxman.com 342(Allahabad) and SLP preferred against the said decision has also been dismissed by the Hon'ble Supreme Court. Thus, the report of Dr. N.K. Batra has been several times, criticized by various adjudicating authority vis-a-vis clandestine removal and the respondent-department has also issued a circular dated 26.06.2014 and several times such notice has also been dropped while passing the Order- in- Original, as stated herein above, as pointed out by the counsel for the petitioner. Despite these facts, in violation of such directions and the circular of the department, the respondents are stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the Executive Director, All India Induction Furnace Association, New Delhi; (v) 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.L.T. 1147 . (emphasis supplied) In view of the aforesaid electricity consumption report, per tonnage, it appears that the variation is from 555 units to 1800 kWH/Per Ton. This is mainly because of the nature of the machinery utilized by the noticee. Looking to the facts of the present case, the electricity consumption pattern as has been given in Annexure- RUD-7, as stated in paragraph 4 of the show cause notice, which is at page no. 63 of this memo of writ petition which reveals that this petitioner has consumed electricity absolutely in consonance with the report given by Joint Plant Committee, constituted by the Ministry of Steel, Government of India and for few months it is even less than that. Thus, there are varieties of report available in the markets, one could not have been chosen by the respondents, arbitrarily, without carrying out the experiment of consumption of electricity for one ton of manufacturing at the noticee's manufacturing unit. This type of experiment is a must by the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondents- department. Instead of doing this exercise, allegation has been levelled that there is low remuneration paid by the noticee, is not sufficient at all. 7. The Order-in-Original is based upon mere presumptions and possibilities, and, nothing has been proved at all by the respondents, especially unaccounted manufacturing of M.S. Ingots and the clandestine removal thereof. 8. The documents which are referred to in the show cause notice and relied upon, should have been supplied to the petitioners. These documents are:- Nucleus Group report and All India Induction Furnace Association Report. These documents have been referred in the show cause notice dated 26.09.2014 ( Annexure-1). Imaginary is the basis of the show cause notice and without proof, the Order- in-Original has been passed in the same breath. 9. We, therefore, quash and set aside the Order-in- Original passed by the Commissioner, Central Excise Service Tax, Ranchi dated 03.03.2016 ( Annexure-14 to the memo of this writ petition). 10. As a cumulative effect, as the Order-in-Original passed by the Commissioner, Central Excise Service Tax, Ranchi dated 03.03.2016 ( Annexure-14 to the memo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
