TMI Blog2018 (6) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted has been arrived at 92.142 MT. The total quantum of finished products manufactured therefrom has been worked out and the excise duty demanded on such quantum of finished products. We find the above basis is fair and is backed by the documents recovered during search - findings of lower authority upheld. Shortage of 5007.290 MT of sponge iron found during physical verification - Held that:- Since the shortage stands admitted, we find no reason to interfere with the demand raised on the finished products on the basis of the above shortage - demand of Central Excise duty which stands confirmed by the Adjudicating Authority against PIL-I, alongwith the penalty imposed, upheld. Penalties on the Directors as well as various employees - Held that:- the adjudicating authority in paragraphs 52 to 59 has elaborately discussed the roles played by various employees of the appellant in the suppression of the actual production and clearance of the finished products without accounting and without payment of duty - penalties upheld. Penalties imposed on the transporter - Held that:- These transporters have played the key role in transporting the finished products such as bloom, bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Sh. T. P. Mukhopadhyay, Senior Manager (Q A) who could not explain the reasons for the shortage. The duty due thereon amounting to ₹ 74 lakhs was paid. 2. Search operations were also conducted at PIL-II on 31.01.2005, when shortage of 89.579 MT of finished goods was noticed and the duty due thereon amounting to about ₹ 2 lakh was paid. 3. Follow up action was conducted with other agencies like Railway, Banks, Municipal Corporation etc. During the course of detailed investigation, statements were recorded from various persons connected with PIL-I and PIL-II including Sh. Ashok Kumar Sharma, G.M. (Accounts), Sh. Rakesh Kumar Bhadoria, A.M. (Logistic), Sh. S. N. Jha, DGM (Excise), Sh. Sanjay Kumar Joshi, AGM (Commercial), Sh. N. K. Gutpa, Sr. Vice President (Commercial). Sh. G. L. Mohta, whole time Director/ Director Operations of PIL who was summoned repeatedly but did not appear before the Officers. So, his statement could not be recorded. 4. After conclusion of investigation, Show cause notices were issued demanding (i) Central Excise duty amounting to ₹ 45.20 crores from PIL-I on allegation of clandestine removal and ₹ 94.59 lakh against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant in its factory. Main raw material for the manufacture of sponge iron was iron ore . 8. Investigation into the affairs of the appellant brought out that there was suppression of receipt of iron ore by it. Such unaccounted quantity was found to be 2,76,896.820 MT. Enquiry made with Railways of Bilaspur revealed that although the appellant industry had procured iron ore of 11,60,328.500 MT from outside during the period 2002-2003 to 30.01.2005 it recorded receipt thereof only 8,96,353.320 MT in Form-IV maintained under Central Excise Act, 1994, giving rise to difference of 2,76,896.820 MT of iron ore not recorded in the statutory record. Such differential quantity was alleged to have been used for clandestine manufacture of sponge iron and captive consumption thereof for manufacture of blooms, billets, ingots etc. which were also ultimately removed clandestinely evading excise duty to the extent herein before stated. 9. In the course of investigation there was discovery of difference in production figures of sponge iron from records maintained at two different places. The quantity recorded in the daily operation report of the directly reduced iron process plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from the plant on the subsequent date whereas the report was submitted on the same day to the Department. That showed that such reported shut downs were false. (g) The Daily kiln operating status report prepared for kiln No.1 2 contained shift-wise parameters, raw material status and other technical details and total production of sponge iron per day as well as total iron ore and coal used per day. Such report recovered in the course of investigation for some intervening period failed with the production report of sponge iron appearing in the daily operation report of directly reduced iron plant recovered from SID for that period. The daily kiln operating status report substantiated the figures of daily operation report of the directly reduced iron plant which appeared to be the correct production report. But the Excise records did not reflect such position (h) The CCR log book and shift record of sponge iron division recovered from SID showed day wise production of sponge iron and operating status of both the kilns. But, the Excise record reflected different story showing low quantity of production. (i) A note pad of Shri T.P. Mukhopadhya, Senior Manager (Quality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile the production figures available in daily operation report of the DRI plant in SID were the actually manufactured figures of the unit and the figures appearing in the statutory record were lower than that, such unaccounting of difference was to evade excise duty intentionally. The yield percentage calculated basing on the figures daily operation report of SID, consumption figures of iron ore and production of sponge iron therefrom during the period 2002 to 30.01.2005 (except for the period 16.11.2002 to 31.03.2003) was 62.26%. But the figures recorded in the Excise records gave rise to the yield of 58.12% demonstrating suppression of production. 11. Investigation also alleged that there were no cash sales of the iron ore. That was falsely claimed by the appellant to suppress quantity of or in manufacture with a view of suppress production of sponge iron and ultimately, blooms, billets and ingots. Appellant showed excess generation of iron fines and transfer thereof to its Induction furnace division to record production of lower quantity of sponge iron. According to investigation, the crushing division at Barbil had transferred only sized iron ore to the appellant for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ingots were clandestinely removed and cleared to these buyers and others named in the show cause notice as well as findings of Adjudicating Authority. 14. Investigation alleged that during the period 01.04.2002 to 30.01.2005 (except for the period 16.11.2002 to 31.03.2003) appellant (manufacturer) systematically suppressed production of sponge iron to the tune of 2,69,603 MT. This unaccounted production of sponge iron was captively consumed for the production of 2,35,336 MT of bloom, billets and ingots in which was also suppressed and clandestinely cleared without payment of duty. 15. Analysis of the production trend of the appellant showed that it was showing abnormally short recovery of sponge iron and production of bloom, billets and ingots during different financial years. However, after investigation, it was noticed that there was a substantial increase in production of all these goods. This brought out malafide and questionable modus operandi of the appellant. 16. While entire electricity consumed was for the production of blooms, billets and ingots, appellant pleaded that power was also consumed in the sponge iron division, slag crusher, work shop, residential col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1161/- 12% 19982539/- 399651/- Oct.04 8365.830 7365.276 18260/- 134489940/- 12% 16138793/- 322776/- Nov.04 19303.600 16994.889 17917/- 304497426/- 12% 36539691/- 730794/- Dec.04 18905.590 16664.481 17063/- 284004778/- 12% 34080574/- 681611/- 1.1.05 to 30.1.05 2307.000 2031.082 18035/- 36630563/- 12% 4395668/- 87913/- Total 92142.060 81121.866 166595019/- 2616085/- 18. 5007.290 MT of Sponge Iron found short in the factory of the appellant during Physical Verification conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and blooms, billets and ingots and made allegation of clandestine removal thereof. Electricity is not only generated in the captive power plant but also wind power was generated by the appellant and used for its various purpose including use in infrastructure. 22. Accounting to appellant, finding irregularities in the original adjudication order of the same appellant, Tribunal had remanded the matter in the decision reported in 2010 (262) ELT 562 (Tri.). There was neither any unaccounted receipt of the iron ore nor there was any unaccounted manufacture of sponge iron. Similarly, no unaccounted manufacture of blooms, billets and ingots were made. When the iron ore was sold at the Railway sliding and that remained unquestioned, there was no scope for Revenue to make allegation that unaccounted iron ore were used for manufacture of sponge iron. 23. Appellant further submitted that there was no investigation made to find that there was no sales of iron ore made at the railway sliding. Ld. Authority below acted suspiciously recording erroneous facts in para 41 of the re-adjudication order. There was no suppression of any kind established. The fact recorded in para 42 of the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was demonstrated by various evidences recovered during investigation. 29. None of the evidence gathered by investigation at the time of investigation were rebutted by appellant. The report recovered from the kiln, sponge iron division and from various sources were not controverted. There were lower quantity of output recorded in Excise record compared to the actual input and electricity consumed. Cogent and credible evidence gathered by investigation proved questionable modus operandi of the appellant. There were shortage of stock found proving clandestine removal. Appellant operated with oblique motive to cause prejudice to Revenue. There was also premeditated design made by appellant to cause evasion systematically and scientifically. 30. With the above background, we have heard various ld. Counsels for the appellant/ assessee and Revenue was represented by Sh. R. K. Mishra, ld. AR. 31. The main points argued by ld. Counsel is summarised below: (i) He submitted that the entire iron ore which is the main raw material is received by the factory through the Railway siding at Bardwar, Orissa; thereafter it goes to the appellant factory through truck. It is submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the appellant-assessee was issuing invoices in such a way that the original and duplicate copies showed the clearance of finished product such as bloom and billets but the triplicate copy showed the same goods fraudulently as slag‟. Such modus operandi came to light only from the incriminating documents seized during the investigation. Further, he argued that: (i) From the elaborate investigations conducted, it stands established that the appellant was not accounting the entire production in their excise division. Three different versions of daily production reports were recovered showing different figures. The recovered documents proved that the manufacture of sponge iron was not fully accounted and the same stand admitted in the statements recorded from various employees such as Sh. M. S. Vas, Manager, Sh. T. P. Mukhopadhyay, Sr. Manager (Q A), Sh. S. N. Jha and others. (ii) The incriminating documents were, in fact, found during the search in a concealed box which was hidden under other debris, This proves their malafide intention to evade payment of Excise duty. (iii) It was also submitted that the claim of sale of iron ore from Railway siding is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f electricity required for unit of the finished product. It has been submitted before us that it will not be fair to take such a view, since the electricity generated and accounted in the annual report includes also that generated by wind farm in Tamil Nadu. Further, it is submitted that the captive power plant not only caters to the direct reduction sponge iron plant but other parts of the appellant‟s factory. But we find that these arguments were considered carefully by the adjudicating authority in the present round of litigation resulting in the impugned order. The demand confirmed in the present proceedings is not entirely on the basis of theoretical calculation of the estimation of finished products. 35. The investigation undertaken by Revenue has conclusively established that the production has not been fully accounted in the statutory record maintained in the Excise Division. The total quantum of production of sponge iron has been determined by the adjudicating authority on the basis of various records recovered during investigation and confirmed and admitted by the appellant‟s employees. These include- (i) daily operation report of the direct reduction ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by trading bills/ challans. They are clearly liable for imposition of penalty as discussed in detail by the adjudicating authority in paragraph 62, the same is upheld. 40. Penalties have been imposed on various alleged buyers of the finished products. From the record of the case, we note that such buyers have been identified only from the details found in the trading invoices. We find that Revenue authorities have failed to carry out any investigation against them. No evidence is found in record that such buyers have actually received the goods. No statements have been recorded from any of the buyers. We also find that the adjudicating authority has failed to discuss the role played by them, if any, in the impugned order. Accordingly, we are of the view that the penalty imposed on these persons is not justified and hence set aside. 41. Finally, we turn to the appeals filed by Revenue. We note that the grounds of appeal is common in respect of all the appeals filed by Revenue. We do not find any details pertaining to individual grounds facts against each respondent. The Revenue appears to be aggrieved only from the fact that the overall demand of Central Excise duty agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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