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M/s. Ambika Waste Management Pvt Ltd., Ambadas S. Nagargoje, Kishore H. Kothani & Jayant V. Kulkarni Versus CC Ex. Aurangabad

Clandestine manufacture and removal - Ms Ingots - Held that: - The Appellant has given certificate issued by the Chartered Engineer that the Capacity of two furnace installed in the Appellant Unit is 5 Mt each. However during the test check by the officers the capacity of molten material was found to be 5.450 MT and 5.600 MT. In this context if some more quantity can be processed in the furnace than its installed capacity the same cannot be made a ground to allege that the assessee always proces .....

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uld vary and cannot remain constant. Even otherwise the capacity of furnace can not be a ground to demand duty. It has to be shown that the goods were indeed manufactured in the Appellant factory and the same were cleared - In absence of evidence of receipt of raw material and clearance of finished goods, absence of buyers and receipt of any money consideration, the charges of clandestine removal cannot be sustained. - Appeal allowed - decided in favor of appellant. - E/2286 TO E/2290/06-MUM .....

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2,12,475/- on removal of MS Ingots and of ₹ 73,440/- on by-products viz. runners, risers was confirmed against M/s Ambika Waste Management Pvt. Ltd. (ii) Demand of ₹ 39,780/- on cenvatable raw material was confirmed against M/s Ambika. (iii) Confiscation of 35.585 MTs of MS Ingots valued at ₹ 7,65,078/- and 108.180 MTs. of MS scrap valued at ₹ 15,14,520/- was ordered. (iv) Penalty of an amount equal to duty was also imposed under Section 11AC of the Central Excise Act. (v .....

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d other Appellants were issued show cause notice dt. 29.04.2005 stating that the revenue officers during their visit to the factory of M/s Ambika on 04.11.2004 initiated investigation and conducted searches. During stock taking excess stock of 35.585 MT of MS Ingots valued at ₹ 7,65,078/- and excess stock of 300 MT of non cenvatable MS Scrap was found and the same being unaccounted was seized. From the weighbridge record pertaining to 5 - 6 days before the search it was found that 371.980 .....

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f MS Ingots. In support of the allegation, reliance was placed on clearances made through transporters and statements of director/ employee of M/s Ambika admitting duty liability. Based upon the average production capacity of plant it was alleged that the Appellant M/s Ambika has produced 4914 MT of MS Ingots and cleared the same without payment of duty. To support the above alleged production reliance was placed upon average power consumption of an industrial Furnace and average unaccounted rec .....

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. 04.11.2004 of Shri Kishore Kothari, accountant of the Appellant firm wherein he accepted use of unaccounted scrap in production and his subsequent statements. That the statements of director have also been relied upon by the Commissioner. However the statements have been recorded under pressure and the same are not corroborated with any independent evidence. He submits that the demand of ₹ 92,12,475/- on alleged removal of MS Ingots has been confirmed by considering the assumed estimated .....

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howing duty liability. There is no evidence of Appellant firm having received any excess MS Scrap than recorded in records. The statement of Shri Kishore was obtained against his will. Shri Kishore in his cross examination on 20.01.2016 has clearly stated that he was looking after financial and not concerned with incoming/outgoing of vehicle. Shri Kishore in his cross examination has stated that 70 - 80 tonnes of raw material was received in M/s R.L. Steel where he is accountant and was not rece .....

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lu Bade and at the time of visit by Shri Ravindra Nagargoje. That statement of Shri Abasaheb Santosh Nagargoje, Partner of M/s R,L, Scrap Merchant was recorded on 06.11.2004 wherein he has nowhere stated that unaccounted scrap was sent to Appellant, but stated that they sent 20 to 22 MT of all types of scrap purchased in cash to their Ahmednagar office and other scrap to Appellants under excise challan as apparent from his statement. This clearly shows that no excess MS Scrap was procured by the .....

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of duty. The reliance placed upon transporters' challan is misplaced. No investigation was conducted with drivers or owners of trucks or alleged buyers to find out as to whether the goods were cleared by Appellant. That even in some challans the consignors are different persons and not Appellant. He further submits that the Ld. Commissioner has wrongly held that the normal power consumption is of 700 units per MT as against 868 shown by the Appellant as it is nowhere appearing in records as .....

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ied the contents of the statements and hence the statements cannot be relied upon. That as there is no investigation from even a single transporter or consignee, it cannot be said that the goods were clandestinely removed. He also submits that as far as raw material is concerned except statements there is no corroborative evidence to show that Appellant received any excess raw material. The deposit of duty of ₹ 55 lakhs was made "Under Protest" during investigation as may be seen .....

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n of only 108.180 MTs of scrap pertaining to 35 consignments. The confiscation of said quantity is illegal as the excess stock has been alleged by comparing the weighbridge slips with the quantity entered in GRR (Goods Receipt report) of Form IV and alleging that quantity of 108.180 remained unaccounted. The officers did not verify the goods by physical verification and in absence of same excess stock of MS scrap cannot be alleged. The quantity of MS Scrap lying in stock was 24246.995 MT which w .....

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en Shri Mahajan and Shri Kishore Kothari are not connected with weighment slips or GRR, their statements cannot be relied upon. Even the weighment slips also show the removal of 'rolling' which was not questioned by the department. Apart from weighment of goods of the factory, the goods of outside parties were also weighed on their weighbridge. Not a single weighbdridge slips was found which bears signature of their staff acknowledging the unloading of goods at their factory. Even the sl .....

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isen only due to the reason that the factory was working in three shifts and one entry of finished goods is made after completion of day. The officers during their visit did not let the Appellants enter the previous day production which resulted into excess quantity. The officers visited on 11AM on 04.11.2004 and therefore the production after midnight remained unrecorded. The excess found goods were production of previous day which was to be entered in next day morning, the charge of non accoun .....

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ned order. He has also filed written submission. 5. On careful consideration of the submissions made by both the sides and on perusal of records, we find that the demand of ₹ 92,12,475/- on Ms Ingots has been made on the assumption that the estimated receipt of MS Scrap in the Appellant Unit was 80 to 100 MT per month. That the Appellant firm had the capacity to manufacture 11 MT. of Ingots per heat and as such the capacity of 10 MT stated by the Appellant firm is incorrect and that the av .....

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05 of Shri Kishore Kothari and compilation statement signed by the director. We find that the statement of Shri Kishore Kothari and Shri Umakant Mahajan stands negated during their cross examination but the same was declined to be considered on the ground that the cross examination were conducted after long time. We are unable to go with the reasoning advanced by the Ld. Commissioner. The statement of Shri Kishore Kothari cannot be made basis for demand unless the same is corroborated with an in .....

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CCE, DELHI-I Vs. VISHNU & CO. PVT. LTD. 2016 (332) E.L.T. 793 (Del.) the Hon'ble Court with reference to reliability of statements recorded at the time of investigation held that "Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as much as it is about its 'reliability . .....

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as been brought on record. We find from the statement of Shri Abasaheb Santosh Nagargoje, Partner of M/s R.L. Scrap Merchant and director of the Appellant Units which was recorded on 06.11.2004 that nowhere he has stated that the unaccounted scrap was sent to Appellant Unit. He has clearly stated that M/s R.L. has sent 20 to 22 MT of all types of scrap which was purchased in cash to their Ahmednagar office and other scrap to Appellants under excise challan. No evidence in the form of sellers/ br .....

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self is not confirmed resultantly the manufacture and clearance of MS ingots does not sustain. The Ld. Commissioner has contended that the average unit consumption is 700 Units per MT whereas the Appellant has shown the average consumption as 868 Units Per MT. We find that no physical test was conducted at the Appellant factory to show the consumption otherwise. Even otherwise only on the basis of consumption of electricity it cannot be concluded that the Appellant has produced excess quantity. .....

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s Per MT. We find that even when the revenue considers the power consumption of 555 to 1026 of similar units as normal in that case the per unit consumption of 868 cannot be taken as basis for clandestine production and removal. In the case of CCE, Meerut-l v. R.A. Castings Pvt. Ltd. - 2011 (269) ELT 337 (All.) as upheld by the apex court reported as Commissioner v. R.A. Castings Pvt. Ltd. - 2011 (269) E.L.T. A108 (S.C.), Savitri Concast Ltd. v. CCE, Jaipur - 2015 (329) ELT 213 (Tri.-Del.), it h .....

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d to be 5.450 MT and 5.600 MT. In this context we are of the view that if some more quantity can be processed in the furnace than its installed capacity the same cannot be made a ground to allege that the assessee always processed the goods more than the installed capacity. The Appellant in his submission has stated that the pressed Scrap will take less space rather than non pressed scrap and therefore the processing capacity of furnace would vary. We are of the view that otherwise also the proc .....

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and clearance of finished goods, absence of buyers and receipt of any money consideration, the charges of clandestine removal cannot be sustained. 5.2 A demand of ₹ 9,78,902/ -for the period Oct and Nov' 2004 out of the demand of ₹ 92,12,475/- is based upon the weighment slips consigned to different buyers. It is alleged that Shri Kishore Kothari accepted the removal of goods without payment of duty. The Appellant has contended that the slips were made prior to dispatch and the a .....

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oborative evidence. In such case when there is no investigation about removal of the goods, the demand cannot be made. We are therefore of the view that the demand of ₹ 92,12,475/- is not sustainable and is set aside. 5.3 There is another demand of ₹ 1,13,220/- on account of clandestine clearance of runners and risers and cenvatable re-rollable scrap alleged to have been cleared to M/s Amar Steel Industries. We find that the demand is based upon the statement of Shri Kothari which al .....

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owners. As pointed out by the Appellant we find that the statement of Shri Raju Gorade has not been adduced as relied upon document in the show cause notice. In such position we find that the demand cannot be sustained. We therefore hold that the demand is not sustainable. 5.4 We find that the confiscation of 35.585 MT of MS Ingots valued at ₹ 7,65,078/- and 108.180 MT of MS Scrap valued at ₹ 15,14,520/- has been confirmed on the ground that such excess stock was admitted by Shri Um .....

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coming on record and their claim has not been held otherwise contrary. Further at the time of the visit of the officers the goods were being cleared legally and no evidences of removal of goods being cleared clandestinely was found. In such case there is no reason to confiscate the goods. Similarly the confiscation of alleged excess stock of 108.180 MT of MS scrap is not legal as the stock was not physically verified. The excess stock has been alleged only on the basis of weighing slips and it w .....

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