TMI Blog2019 (12) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant did not have any power connection. Department has also failed to produce that there is any other alternate source of power to manufacture those goods. In such a situation, it is very clear that the entire demand is based on mere average yield of production and no concrete evidence to manufacture the alleged goods has been brought on the record by the department. The statement which has been relied upon by the department is only in respect of month of June 2013 which is uniformly applied for calculating the demand. It is a well settled principle of law that charges of clandestine removal cannot be based on series of assumptions and presumptions whereas should be based on evidences like unaccounted purchase of raw materials, receipt and consumption of raw materials, freight payment for movement of such raw material, dis-proportionate power consumption, capacity utilization and labor employed, unaccounted sales proceeds and substantial cash recovery from office or factory premises, and so on - In the present case, these clinching evidences are absolutely missing and therefore charges of clandestine removal cannot be held sustainable for demand of ₹ 2,86,17,242. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Rules, 2002. 2. In brief, the appellant is the manufacturer of M.S Ingot and TMT Bars falling under Chapter 72 of the First Schedule of the Central Excise Tariff Act, 1985. The officers of DGCEI, Regional Unit, Raipur visited the factory premises of the appellant on 31.01.2014 and found that there is no stock of raw material (Sponge Iron, Pig Iron, Ferro Silicon, Silico-Manganese, Scrap MS Ingots, MS billets) and finished products (MS Ingots, TMT Bars, Runners Raisers, End Cuttings). During the search of the factory premises, the records of production and clearances of the excisable goods like the Daily Stock Account, the raw material Account Register, the Sale invoice Book etc. were not found. No incriminating documents were found by the officers during the search of the Factory, City office and the business premises at Kabir Nagar, Raipur. Shri Pankaj Agarwal, Director of the company informed the officers that the power connection of the factory was terminated by the Chhattisgarh State Power Distribution Company (CSPDCL) since the month of July 2013 on account of their failure to clear the electricity charge dues. It was also noticed by the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was then used for manufacturing of TMT bars alleged to have been cleared by the appellant without payment of duty prior to July 2013. 4. Similarly the quantity of MS Ingot (of 111.430MT) found in the recorded balance for manufacturing of TMT Bars was also cleared without payment of duty prior to July 2013. The quantity of TMT bars i.e (of 1177.040MT) was cleared by the appellant prior to closure of their factory and the invoices issued in respect with the TMT bars during the period 08.01.2014 to 10.01.2014 are fictitious in nature and no goods were cleared. To prove this allegation in respect of the quantity (of 1177.040MT), it is alleged that the transport documents showing vehicles no. are incorrect, the buyers are also not the actual recipients of the goods and only for clearance of such quantity fake invoices were shown. 5. Similarly, demand of duty against 620.660 MT of Slag was demanded. The show cause notice dated 04.05.2016 was issued for demand of duty amounting to ₹ 3,34,93,077 in respect of clearance of 8085.320MT of TMT Bars cleared without payment of duty by the appellant prior to July 2013. Similarly demand of duty on 620.660MT of qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, part of the finished goods were made liable for duty wherein other finished goods like Runners Risers and M.S Scraps has not been made liable for duty. Therefore, two contrary stands in the show cause notice has been taken and the entire demand is liable to be set aside on the ground that the show cause notice is vague and not sustainable. 6.2 They further submitted that no material evidence has been brought into the record for the alleged manufacturing of 4915.030MT of TMT bars from Sponge Iron on which demand of Central Excise Duty of ₹ 2, 03, 60,300 has been made in the present Show Cause Notice. While calculating the said demand, the department has applied percentage of yield for production (of 84.71%) from Sponge Iron to M.S Ingot derived from Form IV Register from the month of June 2013. Similarly the yield for production (of 91.07%) or conversion of M.S Ingot to TMT bar has been derived from Form IV Register for the month of June 2013. Therefore by applying the yield percentage, the said demand has been raised against the appellant. This entire demand is based on one raw material i.e., Sponge Iron. It is presumed by the officers that this Sponge I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average yield production total amounting to ₹ 2,86,17,242/- is unsustainable and liable to be set aside. The Larger Bench in case of Aum Aluminium Pvt. Ltd. Versus Commissioner of C. Ex., Vadodara 2014 (311) E.L.T 354 has set the parameters to prove the charge of clandestine removal and it was held that charges of clandestine removal cannot be based on series of assumptions and presumptions. Charges should be based on evidences like unaccounted purchase of raw materials, receipt and consumption of raw materials, freight payment for movement of such raw material, dis-proportionate power consumption, capacity utilization and labor employed, unaccounted sales proceeds, substantial cash transaction and cash recovered from office or factory premises, and so on. In the present case, these clinching evidences are absolutely missing and therefore charges of clandestine removal cannot be held sustainable as far as the demand of ₹ 2,86,17,242/- is concerned. The only basis that has been relied upon in the show cause notice to prove the charges of alleged clearance is the statement of Shri Pankaj Agrawal. It is well settled principle of law that serious allegation of clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Jethani was not getting the salary for a long period has intentionally mentioned the wrong vehicles no. in the invoices to equal the score with the company. It is also possible that the transport company or the transporter has informed the wrong vehicle no. to the accountant and accordingly some of the digit of the vehicle no. might have been changed during mentioning in the invoices or it might also be possible that the vehicle no. was correctly provided by the transport company but inadvertently some of the digits were wrongly mentioned and for which the difference is being shown in the vehicle type and their capacities. The department is solely relying upon the inquiries made from transport department and it is alleged that most of the vehicles are not registered with the state transport department. It is a well known fact that the vehicles which become outdated cannot register themselves with the state transport department, but it does not mean that they are inoperative. Therefore only on the basis of transport inquiry, it cannot be concluded that the said transport vehicles are non-existent. 6.5 The Ld. Advocate further submitted that even otherwise out of 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he records of the appellant for the month of June 2013 and as such the demand based on the yield of production is correctly calculated. In respect of demand of duty on the goods cleared during the period 08.01.2014 to 10.01.2014, the Ld. DR submitted that for quantity 1059.920 MT, merely paper transaction was made but no actual goods were cleared from the factory of the appellant. He further submitted that the quantity alleged to have been cleared on the vehicles which are incapable of transporting the goods and therefore the demand amounting to ₹ 45,78,834/- is based on the invoices, on which there is no actual movement of goods. 8. Considered the rival submissions made by both Ld. Advocate and the Departmental Representative. 9. We are of the considered view that the entire demand is based on the yield of production of M.S Ingot which is further used in the manufacturing of TMT Bars. We have also considered that the yield of production was in respect of only a particular month which was uniformly applied for entire demand of Central Excise Duty. At no point or stage, Department has able to prove that the appellant during the relevant period was hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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