TMI Blog2008 (6) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... finished goods viz. MS Ingots and excess stock of 8 MT of MS scrap. Private records found in the premises were seized and statements of officers of M/s. AIPL as well as its Director were recorded from which it was revealed that M/s. AIPL had received scrap in excess of the quantity accouned in Form IV Register and manufactured and cleared ingots without accounting for the same in their records and without payment of duty and had received cash payment. The statements of Directors of M/s. AIPL, customers i.e. Rolling Mills, ingot brokers, CTD bars brokers and of transporters were also recorded. It was found that M/s. AIPL was destroying private records showing excess receipt of raw material, production therefrom and clearance of the finished products at the end of each month, and therefore, there were no past records of clandestine clearance except for the months of August-September 2004. Therefore, in order to ascertain suppression of production and clearance in the past, an analysis on the basis of mean average electricity consumption per MT was undertaken to arrive at the clandestine production. The department adopted the mean average of electricity consumption of 700 KWH PMT base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of customers and brokers also pertain only to this period. As regards the statements of scrap dealers, they have admitted in cross-examination that they had not maintained any records and that their statements were based on computer printout which were shown to them without any verification by them. The Commissioner has referred to procurement of excess scrap of 3733.664 MT and worked out the excess production as 3210.95 MT on this basis. However, the duty demand has not been worked out on this basis, as seen from Annexure-E to the show cause notice. In para 54 of the order, the Commissioner has relied on actual procurement of scrap weighing 1770.105 MT in August, 2004, whereas the statutory records reflect only a quantity of 1244.125 MT, resulting in a difference of 522 MT. However, this excess quantity cannot result in excess production of 822 MT as alleged and confirmed for the month of August, 2004. Therefore, the adjudicating authority has not proceeded on the basis of scrap procurement for determining quantity of production and consequent duty demand. The sole basis for arriving at the quantum of production during the period up to August, 2004 is the electricity consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breakdown, electricity failure/power cut, fluctuations of voltage. The appellants had produced a certificate dated 20-4-2005 of M/s. Megatherm Electronics (P) Ltd. who were the suppliers of crucibles for the induction furnace, certifying as under :- "Induction Furnace Efficiency depended on raw materials (Scrap and Power), also on scrap feeding size of scrap. Power consumption per ton depends on scrap yield and size of scrap (scrap density decide feeding rate). So, average of every month cannot be same due to these variations Electrical Power from Electricity board also varies every hour. Some times input voltage is higher and other time is lower which affects melt rate. Breakdowns and power cuts are also responsible for average production and power consumption. For example: if power fails from Electricity Board in middle of heat, so metal solidifies and again needs power to re-melt. Furnace size is also responsible for power consumption. In bigger Furnaces scrap feeding is easier Electrical efficiency improves. Due to these reasons, we are not responsible for melt rate power consumption and no fixed data can be treated". 5. The figure of 700 KWH/MT adopted for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in Alfa Castings (P) Ltd. v. CCE, Kanpur [1998 (98) E.L.T. 431], wherein the demand confirmed by adopting the figure of 1000 units of electricity PMT of M.S. ingots was set aside. In the recent decision of Air Carrying Corporation Pvt. Ltd. others (Order Nos. A/415 to 425/08 C.I. dated 9-5-08) [2008 (229) E.L.T. 80 (Tribunal)], the demand confirmed on the basis of furnace oil consumption of 50 Ltrs PMT of finished products was set aside by the Tribunal inter alia relied upon its earlier order in Nav Karnataka Steels Pvt. Ltd. v. CCE (Final Order No. 1297-1304/07 dt. 16-11- 2007) [2008 (225) E.L.T. 454 (Tri.)]. The relevant extracts from the above order are reproduced below :- "4. We agree with the appellant that no demand can be confirmed only on the basis of Furnace Oil consumption, in the light of the Tribunal's recent order in Nav Karnataka Steels Pvt. Ltd. v. CCE-Final Order No.1297-1304/07 dated 16-11-2007. In that case also evidence of clandestine removal involving duty of Rs. 12,40,730/- existed and the assessee accepted this demand and did not contest the same and the Tribunal confirmed this demand. The total demand raised was Rs. 4,57,49,000/- (including the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to Sec. 11AC. Pre-deposit of Rs.10 lakhs had also been made in compliance with the stay order. In the light of the Tribunal's orders in Nav Karnataka Steels (P) Ltd. and Air Carrying Carporation P. Ltd. Ors, we reduce the penalty on M/s. AIPL to Rs.5 lakhs (Rupees Five lakhs). Penalty on Shri Sandeep Agarwal is reduced to Rs.2.50 lakhs (Rupees Two lakhs fifty thousand only). 11. The penalty on M/s. Multi Steel Stores (Appeal No. E/2654/06 has been filed by its partner Shri Anurag Krishnalal Dhawan) has been imposed on the ground that they were one of the purchasers of M.S. Ingots cleared clandestinely from M/s. AIPL without proper invoices, is upheld as the demand for duty on goods clandestinely cleared during the months of August-September 2004 (up to 3-9-04) has been upheld by us. (The involvement of this appellant is brought out in the statement of Shri Sandeep B. Agarwal, transporters and dealers.) 12. In the result, we uphold the duty of Rs.20,36,114/-, set aside the balance demand, reduce the penalty on M/s. AIPL to Rs.5 lakhs (Rupees Five lakhs) and on Shri Sandeep Agarwal to Rs.2.50 lakhs (Rupees Two lakhs fifty thousand) and uphold the penalty of Rs.15,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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