TMI Blog2017 (5) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture and removal of excisable goods has to be proved viz. by excess receipt of raw material by the Appellant and non-accountal thereof in the statutory records, manufacture of finished goods, labour employed and payment made to them, packing material used and various factors - in the instant case not a single of such evidences was found. Even the department has not taken any step to investigate any such incidence for the very simple reason that nothing of that nature of evidence available - thus, there is no reason to hold that the demand based upon the electricity consumption is sustainable and hence is set aside. As regard other demands, all other demands are also set aside in the absence of corroborative evidence and lack of investigations on some issue. The Adjudicating authority has also disallowed the credit of ₹ 36720/- on cement and the Appellant has not pressed on contesting the said demand. We therefore hold that the demand of ₹ 36720/- is sustainable. The demands made against the Appellant Unit M/s Meenakshi Re-rollers Pvt. Ltd., except cenvat demand of ₹ 36,720/-, are not sustainable - Consequentially penalties imposed against them are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise duty of ₹ 3,00,188/- on 113.455 MT of MS Ingots alleged to have been clandestinely cleared. (x) Demand of ₹ 6,46,31,888/- on 27,711.193 MT of MS Ingots alleged to have been clandestinely cleared. 3. The facts of the case are that the Appellant unit is engaged in the manufacture of MS Ingots and Hot Re rolled product falling under chapter 72 of the Central Excise Tariff Act. During investigation the officers found that there was shortage of finished goods and raw material. Further found that the Electricity consumption for per MT of MS ingots is much more than required. Reliance was placed on the Technical opinion report of M/s IIT, Kanpur and article of Shri R.P. Varshney, Executive Director, All India Induction Furnace Association that for production of one MT of Ms Ingots in induction furnace the power consumption is 650 to 820 units depending upon the input charge used. Further alleged that the furnace of same make has been installed in another manufacturer M/s Tirupati Ispat Ltd who has clarified the range of electricity consumption as 600 to 625 units per ton without use of Sponge Iron and 660 to 900 units with Sponge Iron for furnace of 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at power consumption was 1773 Units per MT on 08.12.2005 and 1757 Unit per MT on 12.12.2005 and thus the average works out to 1765 per MT. That in spite of actual test the same has been disregarded which shows that the demand is without any basis. Out of total power consumption approximately 25 to 30% is utilized for maintaining the ancillary functions within the factory without which the production is not possible and furnace cannot be used to produce ingots. That the electricity was also consumed in installing the Furnace/ furnace shed as well as the rolling mill. The above factors were not at all considered. The Appellant had pleaded that after conducting proper verification the consumption figures should be considered. However no exercise to determine the consumption of electricity in setting up of factory or used in ancillary purposes was undertaken. That the adjudicating authority has not disputed the above facts but did not consider the same. The entire record of details of production, clearances cannot be disregarded as no evidence to the contrary has been found. He relies upon the judgment in case of R.A.Castings Pvt. Ltd 2009 (237) ELT 674 of Tribunal as upheld by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 929.470 MT of Sponge Iron. The quantity of Sponge Iron has been arrived at on the basis of fax papers and loose papers from the Appellant's office and fax from M/s Shyam sales a registered dealer. It was alleged that the goods were consigned to Pune but were unloaded at the Appellant's factory. Reliance was placed upon the statement of Shri Vinod Agarwal. The Ld. Advocate submits that the loose papers at Page 35, 36 37 concerned in this demand were retrieved from their office on 05.01.2006. The documents clearly shows that they are fax copies of dispatches of Sponge Iron by M/s Shyam Sales, a registered dealer who supplies sponge iron to the Appellant at Pune as well as M/s Minakshi Ferro Ingots in Pune as per the instructions of Mr. Nikhi Bansal who is common director of both companies. The dispatch advises were also reflected in sales records and excise records of Shyam Sales Corporation of which Mr. Basant Kela is proprietor. Apart from giving complete reconciliation and proving that there was no excess or shortage in supply of sponge iron by him to both the companies as per orders of Shri Nikhi Bansal. He also in his cross examination dt. 09.11.2010, 15.05.2012 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .059 MT of MS Ingots and has been calculated on the assumption of 4.450 MT of Silicon manganese having been consumed as raw material. The reason for difference is that the Appellant had made twice entry of 4.450 MT of Silicon manganese in Form IV which the officers seized on 05.01.2006. The clerical error of double entry of same items on two different dates was not allowed to be rectified. There is no evidence that the Silicon Manganese of same quantity was received twice in their factory. No evidence of receipt has been found. Moreover there is no evidence of assumed 1047.059 MT of production of MS Ingots from said quantity of Silicon Manganese. 5.8 The demand of ₹ 7,87,047/- on 294.745 MT of MS ingots is on the ground that the Appellant shown return of rejected goods and availed cenvat credit but no record of identifying the goods were kept and department was not intimated. He submits that the demand is illegal. They had sold goods to four parties who returned the goods. The Appellant had made entries of such returned goods and at the time of clearance the duty was charged. The officers did not scrutinize the records and made demand which is not correct. No verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Kuber Tobacco Products Ltd. Vs. CCE (2013) 290 ELT 545 (TRI), Pan Parag (I) Ltd. Vs. CCE (2013) 291 ELT 81 (TRI), CCE Vs. pentagon Steels Pvt. Ltd (2013) 288 ELT 271 (TRI), Oudh Sugar Mills Ltd, Vs. CCE (1978) 2 ELT 172 (SC), Flavel International Vs. CCE (2016) 332 ELT 416 (DEL), Arya Fibers Pvt. Ltd. Vs. CCE (2014) 311 ELT 528 (AHD) 6. On the other hand, Shri Roopam Kapoor, Ld. Commissioner (AR) appearing for the revenue reiterates the findings of the impugned order and submits that the Appellants were misreporting the production. That taking basis of 1046 Units of power consumption for 1 MT of MS Ingots, it was observed that there was shortage of 27,711 MT of MS ingots. He submits that the employee of the Appellant unit had agreed with the investigation and the statements were not retracted. He also submits that during investigation it was found that the Appellant has received unaccounted goods or did not recorded the consumption which has resulted into unaccounted production of goods and clandestine clearances. 6. We have gone through the facts of the case and relevant records before us. We find that the major demand of ₹ 6,46,31,888/- has been made against A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been upheld. In identical facts and cases the Hon ble High Court in the case of CCE Vs. R.A. Castings reported in 2011 (269) ELT 337 has upheld the order of Tribunal thereby setting aside the demand. The SLP filed by the revenue was dismissed by the Hon ble SC as reported in 2009 (268) ELT A108 . The same view has been propounded by the Tribunal's judgment in case of CCE, INDORE Vs. VENUS ALLOY PVT. LTD. 2016 (337) E.L.T. 561 (Tri. - Del.), Pragati Steels Pvt. Ltd.- 2012 (286) E.L.T. 253 (Tri. - Del.) and Mumbai Tribunals Final Order No.A/4002 4005/EB dt. 31.12.2005 in case of M/s Kamboj Ispat Pvt. Ltd. Vs. CCE, Nagpur . Further as far as demand based on power consumption is concerned it cannot be sole ground to raise demand against the assessee. It is incumbent on the part of the revenue to show that the manufacturing activity took place, goods were manufactured, records were manipulated, manpower was used, clandestine procurement of raw material and clandestine clearance of goods. There is no record of any excess manufacturing activity taking place which can substantiate the allegations against the Appellant Unit. Unless the manufacture of the MS Ingots is prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ms Ingots. We find from the records that the shortages were arrived without conducting physical verification of goods and only on the basis of eye estimation which is not a correct method of physical verification. Further the officer concerned in his cross examination accepted the there was no actual weighment and that also there was arithmetical error which now results into very small shortage. Further the evidence of removal of such alleged shortage is not brought on record. Looking to all these aspects we are of the view that no shortage can be alleged and the demand is not sustainable. 6.2 Demand of ₹ 1,82,888/- is based on shortage of Sponge Iron and Melting material alleging that the same was used in manufacture of 72.632 MT of M.S Ingots which were cleared clandestinely by the Appellant. We find that no actual weighment was conducted and merely on the basis of shortages of raw material it cannot be said that the goods has been consumed in manufacture of finished goods which in turn were cleared clandestinely. Further in the same manner it is alleged that the short found Silico Manganese quantity 1.433 MT has been used in manufacture of 337.176 MT of MS Ingots va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 916/-. Further it is alleged that the Appellant company have received 929.470 MT of Sponge Iron in unaccounted manner and the same has been used for manufacture of 843.866 MT of MS Ingots valued at ₹ 1,34,41,939/- involving duty of ₹ 21,93,724/- which was also clandestinely cleared. 6.4 We find that as far as unaccounted Ferro Silicon is concerned again it is not appearing as to how 2.00 MT of Ferro Silicon goods which gets burnt during process of manufacture of MS Ingots will result into manufacture of huge quantity i.e 470.588 MT of MS ingots. Even otherwise 470.588 MT of MS Ingot cannot be manufactured from 2.00 MT of Ferro Silicon. In case of unaccounted Sponge Iron of 929.470 MT we find that the allegation is based upon transporter's record or octroi receipts as well as statement of Shri Vinod Agarwal. We find that Shri Vinod Agarwal during his cross examination has declined to have any knowledge regarding receipt of sponge iron stating that he was not concerned with the purchases. Even the Superintendent, who has seized the loose papers, in his cross examination, has stated that no further investigation was undertaken to verify the facts or inspect the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown that the returned goods were brought into the factory, the cenvat credit of such goods is available to the assessee. Therefore in absence of any evidence contrary to the receipt of goods we hold that the demand is not sustainable. 6.7 A demand of ₹ 24,61,052/- is made on 934.730 MT of MS Ingots on the basis of transporter's record and records of octroi department. We find that apart from enquiry for the sales tax department who informed that the recipients firms are not registered with them and the statement of transporters, no effort was undertaken to identify the recipient of those goods. The goods are not identified to have been cleared by the Appellants nor there is any evidence of receipt of proceeds by the Appellant. The drivers of the vehicle were not called upon the identify the place of delivery. Merely on the basis of LRs or response of the sales tax department, the charges of clandestine removal cannot be made and substantiated as there is no buyers/ recipient of such goods. We therefore hold that the demand is not sustainable. 6.8 A demand of ₹ 3,00,188/- has been made on 113.455 MT of MS ingots on the ground that in the statement of commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
