TMI Blog2017 (1) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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, nothing has been proved at all by the respondents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been preferred. 3. Arguments canvassed by the counsel for the petitioner: Counsel appearing for the petitioner submitted that there is gross violation of principle of natural justice. The report of Dr. N.K. Batra was referred to and relied upon, in the show cause notice but in spite of specific request of the petitioner, the petitioner was not allowed to examine Dr. N.K. Batra. The whole show cause notice is issued upon presumptions and surmises about unaccounted manufacturing of M.S. Ingots and clandestine removal of the final product and nothing has been proved by the respondents. Only on the basis of presumptions, the show cause notice has been decided. The consumption of electricity pattern which is referred in the show cause notice as well as in the Order-in-Original, is absolutely baseless. It is submitted by the counsel for the petitioner that looking to Annexure - B1 and B2 as referred in para 3 of the show cause notice, reveals the electricity consumption per M.T., which is absolutely in consonance with the report given by the Joint Plant Commissioner constituted by the Ministry of Steel, Government of India and as per this report, the consumption can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the counsel to the counsel for the respondents. (b) M/s. Madhura Ingots Steel Co. Pvt. Ltd. Order-in-Original:07/Central Excise/commr/2015 dated 19.05.2015. (c) M/s. Jagannath Cement Works Pvt. Ltd. being Order-in-Original:31/Denovo/Commr/2015 dated 15.12.2015. (d) M/s. Kamsa Steel Pvt. Ltd. being Order-in-Original:33/commr/2015 dated 21.12.2015, and several other orders, copies of which have been given to the respondents. On the basis of aforesaid decisions, it is submitted by the counsel for the petitioner that electricity consumption pattern, is useless argument, on behalf of the respondents. Every now and then, such argument has been canvassed, in the Order-in-Original and the first adjudicating authority has dropped the baseless notice and whenever the first authority has confirmed such ground, the tribunals have passed the Orders and quashed such ground, like in the case of R.A. Castings Pvt. Ltd. Vs. CCE, which is approved by the Allahabad High Court and SLP has been dismissed by the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edpur. (ii) In the show-cause notice, Dr. N.K. Batra's report has been referred to and relied upon. Moreover, there is also reference of Nucleus Group report as well as there is a reference of All India Induction Furnace Association report. (iii) Counsel appearing for the petitioner has relied upon several decisions, as stated hereinabove. It ought to be kept in mind by the respondents that the electricity consumption pattern can be a corroborative ground and not a substantive ground at all. Thousands of possibilities cannot be equated with one truth. The grounds, which are referred in the Order-in-Original, are in fact leading the respondents towards the highest probabilities and nothing beyond that to suspect that there is clandestine removal of the finished product by the noticee. (iv) Nonetheless, for exact proof of unaccounted manufacturing of finished products and for clandestine removal thereof, more labour was required to be done by the respondents. It has become fashion with the respondents-department to rely upon a document, since 2003 onwards, which is known as report given by Dr. N.K. Batra, so-called Professor of IIT, Kanpur. (v) Right from 2003 onwards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which, allegation of clandestine removal of the finished product is levelled. The electricity consumption report like Dr. N.K. Batra report can hardly be treated as a substantive evidence. Time and again, the decisions have been given by the tribunals, but, the respondents-departments are turning deaf-ear to. In this case, the respondents are relying upon Dr. N.K. Batra's report. All these are nothing but the possibilities, for clandestine removal, but, for proving the clandestine removal, the substantive piece of evidence is must. Few such evidences have been referred by this Court. The list of these evidences is not exhaustive:- [I] The department should have collected the proof of amount received from the consignees, statement of consignees, receipts of sale proceeds by the consignor and its disposal. (vii) As no adequate opportunity of cross-examination has been given to the petitioner, there is violation of principles of natural justice, hence, this writ petition is entertained at this stage. It has been held by Hon'ble Supreme Court in the case of 'Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai Ors.', reported in (1998) 8 SCC 1, in paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other product is involved, so that average consumption of electricity can be accurately measured by the respondent-department. Electricity consumption, which is based upon Dr. N.K. Batra's report is absolutely useless, with reference to the units for which allegation is levelled for clandestine removal without carrying out any experiment of consumption of electricity in the very same unit. Hence, we, hereby direct the respondents, henceforth not to use Dr. N.K. Batra report against any noticee especially when the department is levelling allegations of clandestine removal of finished products, unless, the experiment of consumption of electricity is carried out at the factory premises of the very same assessee/noticee. The consumption of the electricity depends upon the efficiency of the machines also. It also depends upon the fact whether the noticee is utilizing obsolete machinery or modern machinery. Dr. N.K. Batra might have carried out experiment in a factory where there may be efficient machinery, whereas machines used by the noticee may not have the same efficiency. Therefore, cross examination of Dr. N.K. Batra is must. Department can use the report of Dr. N.K. Batra' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that effect. Article 265 of the Constitution of India says that no tax shall be levied or collected except by authority of law. Unless the manufacture of the steel ingots is proved to the hilt by authentic, reliable and credible evidence, duty cannot be demanded on the basis of hypothesis and theoretical calculations, without taking into consideration the ground realities of the functioning of the factories. High consumption of electricity by itself cannot be the ground to infer that the factories were engaged in suppression of production of steel ingots. The reasons for high consumption of electricity in the case of the appellants' factories have not at all been studied and analysed by the Revenue independently. Instead, the norm of 1046 units fixed as per Dr. Batra's report has been blindly applied to the appellants' cases to work out the excess production. This approach is flawed and does not have sanctity. 21. The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ennai); (iv) Commissioner of Central Excise, Coimbatore v. Sangamitra Cotton Mills (P) Ltd. reported in 2004 (163) E.L.T. 472 (Tri-Chennai); (v) Commissioner of Central Excise Coimbatore v. Velavan Spinning Mills reported in 2004 (167) E.L.T. 91 (Tri.-Chennai); (vi) M. Veerabadhran and others v. Commissioner of Central Excise, Chennai-II reported in 2005 (182) E.L.T. 389 (T) : 2005 (98) ECC 790 (T). 23. The Tribunal has consistently taken the view that wherever electricity consumption alone is adopted as the basis to raise demands, the order of the lower authorities have been held to be unsustainable in law and set aside and the Revenue had been directed to carry out experiments in different factories on different dates to arrive at the average to be adopted as a norm, which can be followed thereafter and the Revenue in the present case not having conducted any experiment whatsoever cannot be permitted to justify the demands raised. It will be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. These facts have been referred in paragraph Nos. 19 20 of the decision reported in 237 ELT 674 and the same reads as under:- 19. The main question to be decided in the instant appeals here is whether the appellants during the period December 2001 to March, 2005 have actually manufactured M.S. Ingots in excess of what has been recorded in their statutory records and removed the said quantity clandestinely from their factory without payment of duty. The excess production has been worked out on the basis of electricity consumption for which the standard norms are imported from report of late Mr. N.K. Batra, Professor of Material and Metallurgical Engineers, IIT Kanpur. 20. We find that the following reports have been referred to either by the appellants or the Revenue laying down the norms for the consumption of electricity for the manufacture of one MT of steel ingots: (i) 555 to 1046 (KWH/T) as per Dr. Batra's report; (ii) 1800 KWH/T as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India; (iii) 1427 KWH/T as per the report of NISST, Mandi, Gobindgarh given in June-July, 2006; (iv) 650 units to 820 units/MT as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , arbitrariness is absent. 6. Hence, this Court is remanding the matter to the Additional Commissioner, Central Excise Service Tax, Jamshedpur. This Court is not much going into detail of further arbitrariness in the Order-in-Original. There appears to be very high sounding reasons, but, if they are viewed with zoom lens camera, it appears that nothing is proved by the respondents. 7. The Order-in-Original is based upon mere presumptions and possibilities, and, nothing has been proved at all by the respondents, especially unaccounted manufacturing of M.S. Ingots and the clandestine removal thereof. 8. The documents which are referred to in the show cause notice and relied upon, should have been supplied to the petitioner. These documents have been referred in the show cause notice dated 30th March, 2007 (Annexure-A). Imaginary is the basis of the show cause notice and without proof, the Order-in-Original has been passed in the same breath. 9. We, therefore, quash and set aside the Order-in-Original passed by the Additional Commissioner, Central Excise Service Tax, Jamshedpur dated 29th February, 2008 (Annexure-1 to the memo of this writ petition). 10. As a cumula ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
