TMI Blog2017 (11) TMI 1770X X X X Extracts X X X X X X X X Extracts X X X X ..... l, but, for proving the clandestine removal, the substantive piece of evidence is must. The department has not done any home work and the show cause notices dated 30.07.2008, 04.02.2009, 18/19.11.2009 (Annexure-1 Series) have been issued. This type of shortcut should not have been followed by the department. There is no shortcut for success. The documents and evidences could have been collected very easily by the department, if at all, department is of the opinion that there is a clandestine removal of finished product viz M.S. Ingots by the petitioner. The respondents are directed not to mention Dr. N.K. Batra's report in their show cause notice unless an experiment is carried out by the respondent department in the factory premises of the notice for production of 1 MT or for production of more than sufficiently large quantity like 1000 units etc. in any other cases, because electricity consumption depends upon the nature of machinery. Even two refrigerators of same kind and type and capacity may not have the same consumption of electricity, because one may be new and another may be old. The Order-in-Original is based upon mere presumptions and possibilities, and, nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18/19.11.2009 were given by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur for the period running from for the period running from July, 2007 to December, 2007, from January, 2008 to November, 2008 and for the period December 2008 to July, 2009. Thereafter, the Order-in-Original was passed by the Commissioner, Central Excise and Service Tax, Jamshedpur on 30.03.2010/09.04.2010 (Annexure-2). Being aggrieved and dissatisfied by the show cause notices as well as by the Order-in-Original, the petitioner preferred statutory Appeal before the learned Customs, Excise Service Tax Appellate Tribunal, Kolkata which was dismissed on the ground of limitation vide order dated 10.09.2014. Being aggrieved and dissatisfied by the order dated 10.09.2014, the present writ petition has been preferred. However, the petitioner had filed Interlocutory Application primarily confining its prayer by challenging the Order-in-Original dated 30.03.2010, which was issued by the Commissioner, Central Excise, and Jamshedpur on 09.04.2010, which is at Annexure-2 of the writ petition. 6. Arguments canvassed by the counsel for the petitioner: Counsel appearing for the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about the loss sustained by the petitioner. Merely because there is a loss to this petitioner, that does not mean that there is a clandestine removal. Counsel appearing for the petitioner has relied upon the decisions which are as under:- (a) R.A. Castings decisions reported in 237 ELT 674, which is confirmed by the Division Bench of Hon'ble Allahabad High Court reported in 2010(1) taxman.com. 342 (Allahabad), against which SLP preferred by the department, has also been dismissed. (b) W.P. No. 173 of 2014 decided on 22.04.2014 by the Hon'ble Calcutta High Court. Counsel for the petitioner has pointed out that in several similarly situated cases, in which Dr. N.K. Batra's report has been referred to and relied upon, for proving clandestine removal of the finished products, in the show cause, ultimately in the Orders-in-Original, the show cause notices have been dropped by the adjudicating authority itself. The similarly situated cases are as under:- (a) Globe Steel Alloys Pvt. Ltd., the Order-in-Original:02/Central Excise/commr/2015 dated 31.03.2015,copy whereof has been given to the counsel for the respondents. (b) M/s. Madhura Ingots Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Order-in-Original and the appeal has been preferred before the Central Excise and Service Tax Appellant Tribunal (CESTAT) under Section 35(B) of the Central Excise Act, 1944, which was dismissed. Counsel appearing for the respondents submitted that Dr. N.K. Batra's report is not an only ground as mentioned in the show-cause notices, there are several other grounds. In detail, consumption of electricity pattern has been mentioned in Annexure B. Similarly, other grounds have also been dealt with in detail, in the Order-in-Original and, hence, this Court may not entertain this writ petition. Reasons: 8. 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 30.03.2010/09.04.2010 (Annexure-2 to the memo of this writ petition) mainly for the following facts and reasons: (i) Show-cause notices were given by the respondents on 30.07.2008, 04.02.2009,18/19.11.2009 for the period running from July, 2007 to December, 2007, from January, 2008 to November, 2008 and for the period December 2008 to July, 2009 mainly on the ground that there is unrealistic electricity consumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing 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. (f) Ostensible discrepancy in the stock of raw materials and the finished product. (g) Clandestine removal of goods with reference to entry/exit of vehicles like Trucks etc. in the factory premises. (h) If there is any proof about the loading of the goods in the Truck, like weight of truck etc. at the weighbridge, security gate records, transporter documents such as lorry receipts, statements of the truck drivers, entries of the trucks/vehicles at different check-post. Different types of forms which are supplied by the Commercial Tax Department, like Road Permit supplied by the commercial tax department, receipts by the consignees etc. These documents ought to have been collected by the respondent-department, if at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court in the case of Asstt. Commissioner of Commercial Tax V. Shukla and Brothers (2010) 4 SCC 785 on which reliance has been placed by the learned counsel for the petitioner wherein the court has held that the principles of natural justice has twin ingredients; firstly the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing.; and secondly, the orders so passed by the authorities should give reasons for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case vitiate the order itself. 11. Examining the facts of the present case in the light of the above decision, while it cannot be said that the impugned orders are totally non-reasoned orders, at the same time, the main contention advanced on behalf of the petitioner has not been dealt with and no reasons have been assigned for not accepting the same. The impugned order does not show that the authority concerned has applied its mind to the contention raised by the petitioner. Therefore, as held by the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he report of Dr. N.K. Batra as the guidelines and nothing beyond 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, straightway, 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, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be/fix norm for electricity consumption first and notify 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, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. The impugned 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) (ix) 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-`-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 petitioners. Despite these facts, in violation of such directions and the circular of the department, the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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-B of the show cause notices, 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 department, whenever respondents are canvassing the ground of electricity consumption pattern v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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