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TMI Blog2018 (8) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice dated 05/05/2014, Revenue has filed the present appeal. 2. We have heard the learned A.R. Shri Pawan Kumar Singh appearing for Revenue. Nobody appeared for the respondent. 3. Having gone through the impugned order, we find that the respondents are engaged in the manufacture of MS Ingots. During the course of audit conducted in their factory and based upon the scrutiny of records the respondent was asked to declare their input output ratio which the respondent complied with. Statement of their employees was recorded whereas he again gave the input output ratio. Based upon the same Revenue entertained a view that the respondents have suppressed their production for the Financial Year 2009-10 and 2010-11. Accordingly, proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: a. The grade and purity of Sponge Iron which may contain different percentage of iron content, dust, oxidized iron/rut; b. The grade and purity of HMS/MS Scrap which may contain different percentage of iron content, dust, oxidized scrap/rust; c. The consumption of sponge iron depends upon the quality of scrap being used which, depending upon source, may vary in percentile Ispat content; d. The metallurgical process adopted for production, the working conditions in production unit, the power supply conditions, the technology used for production and the fund flow for procuring raw material also affect the production to some extent. xi. That, there are variety of reasons, which may lead to different consumption patterns. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne procurement of raw material, suppressed production from such clandestinely procured raw material & clandestine removal of so produced goods, the allegation of suppressed production and clandestine removal of such goods cannot sustain under law. xvi. That, therefore, the allegation of evasion of the duty demanded in the SCN is nothing but pure assumptions, which is not sustainable under law. xvii. That, the onus to prove the allegations leveled in the SCN is cast upon the department and the department. The department is duty bound to discharge onus cast upon it and adduce cogent and corroborative evidence to prove the allegations made in the SCN. xviii. That, the department has failed to adduce even an iota of evidence to prove the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corresponding degree of impurities like dust & rut and the low degree of iron content in these scraps also results in to low yield of finished iron ingots. xxiv. That, if the Noticee get some sponge iron or scrap cheaper even if high in impurities on credit, they have to go for it and as a result, the recovery of output goes down. xxv. That, the standard input to output formula can only be adopted by big manufacturers who adopt standard procedures and bank upon standard suppliers and/or standard inputs. Whereas, the standard input to output norms cannot be applied to the small furnace like that of the Noticee because they cannot maintain any standard regarding inputs like sponge iron and M. S. /H.S. Scraps and it depends more upon avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame deserves to be dropped summarily. xxxi. That, the Noticee have not contravened any provision of law as alleged in the SCN and hence are not liable for any penalty. They placed reliance on the ratio of following cases: * Chandan Tobacco Co. vs. CCE, Vapi 2011 (270) E.L.T. 87 (Tri.-Ahmd.). * Ravi Foods P. Ltd. vs. CCE, Hyderabad, 2011 (266) E.L.T. 399 (Tri.-Bang.). * Amar Ceramics Ltd. vs. CCE, Rajkot, 2007 (213) E.L.T. 64 (Tri.-Ahmd.). * CCE, Allahabad vs. Mohd. Anis & Sons Biri Workers, 2009 (246) E.L.T. 276 (Tri.-Delhi). xxxii. That, the actual data for consumption do not support department's theory. xxxiii. That the total production of finished goods [Steel Ingots] and total consumption of raw material [Sponge Iron & Scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kg MS Scrap (NDP) 506.520 20.91 Kg HMS (imported) 2126.890 87.84 Kg Remelting Runners/Risers 383.140 15.82 Kg Total scrap conent 4525.350 186.89 Kgs Total 28504.361 1177.17 Kgs xxxvi. That, therefore, during the year 2009-2010, the ratio of consumption emerges to be as under: Sponge Iron: 990.28 Kg per MT of MS Ingots. Scraps : 186.89 Kg per MT of MS Ingots. xxxvii. That, the similar ratios would emerge if they analyse the data for the year 2010-11 also. xxxviii. Thus, the ratio of 900 Kg Sponge Iron per MT of M.S. Ingots, as made basis for allegations in the SCN, is proved to be incorrect, on the basis of actual data duly audited and declared. xxxix. They enclosed E.R.-5 Returns and reply to audit obse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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