9911796707
TMI Blog2024 (8) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty of Rs.30,00,000/- imposed on him. 2. Briefly stated, the facts of the case are that Appellant has two units. Its unit-I is engaged in manufacture and clearance of flanges of Carbon Steel, Stainless Steel and Alloy Steel falling under Chapter 73 of the Central Excise Tariff Act, 1985. Unit-II is engaged in manufacture and clearance of rounds and ingots of carbon steel, mild steel, alloy steel and stainless steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. DGCEI carried out search in the two units of the Appellant, its sister concern M/s. Kunj Forgings Pvt. Ltd KFPL. residence of the Directors, some job workers and some suppliers of raw material. It was seen that scrap arising out of manufacturing activity of KFPL was the main raw material of Unit-II of the Appellant and the finished goods manufactured by Unit-II was main raw material of KFPL. Major part of finished goods manufactured by Unit-II was being sold to KFPL and major part of raw material of Unit-II was being supplied by KFPL. All the four Directors of Appellant are Directors in KFPL while KFPL has one more Director. During the search in Unit-I, all stocks of finished goods and raw material were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued to KFPL which was adjudicated by Order-in-Original No.61/COMMISSIONER/GZB/2009 dated 24.12.2009. In appeal before the Tribunal, the said Order-in-Original in case of KFPL was set aside. 5. Period of demand in the present case is for the period from March, 2005 to May, 2006. The ld. Counsel submitted that demand is on account of allegation of clandestine removal of ingots which are alleged to have been manufactured by showing excess consumption of electricity, demand on ingots on the basis of ledger pages, demand on risers & runners which are alleged to have been manufactured but not accounted for on the basis of electricity consumption, alleged shortage in quantity of raw material and inadmissible Cenvat credit on receipt of scrap. 5.1 He contended that a major portion of the demand has been calculated on the presumption that only 678 units of electricity are needed to manufacture 1 MT of finished goods (Ingots/Rounds). On this basis, it has been alleged that 6564.657 M.T. of ingots and 184.454 M.T. of runners and risers were manufactured and removed clandestinely by the Appellant over and above what was reflected in the statutory records during the period 2004-05, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice of furnace manufacturer, M/s. Inductotherm (India) Pvt. Ltd., shows capacity of the furnace as 5 MT. The electricity load of the Appellant sanctioned by the Managing Director, Paschimanchal Vidyut Vitran Nigam Ltd. is also for a 5 M.T. Induction Furnace only. Hence all calculations made in the SCN and impugned order on the basis of 7 M.T. furnace capacity are erroneous and merits to be set aside. 5.8 That Officers of DGCEI, DZU, New Delhi visited unit of the Appellant on 22.05.2008 and conducted heat study. The power consumption was found to be 1144 unit per M.T. which also proves that the Department's allegation that only 678 units per M.T. are consumed is wrong and the demand on this basis is not sustainable. 5.9 That Chartered Engineer visited unit of the Appellant on 20.04.2009, 22.04.2009, 25.04.2009 and 12.05.2009. In his study, power consumption was found to be 950 units per M.T. for M.S., 1150 units per M.T. for CS, 1250 Units per M.T. for M.S. Castings and 1300 units per M.S. for stainless steel. 5.10 That the demand of Rs.4,44,576/- on alleged shortage of 23.688 M.T. of S.S scrap is not sustainable. The physical verification was done by Officers at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/95-CE dated 17.03.1995. Hence demand of duty in respect of runners and risers is not sustainable. 5.16 That Cenvat credit of Rs.63,45,801/- has wrongly been denied to the Appellant. The demand is based on the allegation that M/s KFPL has only issued invoices to the Appellant without actual movement of goods. 5.17 That scrap was removed by KFPL on payment of duty. No SCN has been issued to KFPL alleging that they have only issued invoices without removal of goods to the Appellant. In the present SCN also, KFPL has not been made a co-noticee for imposition of penalty alleging that they have only issued invoices on which Cenvat credit has been wrongly availed by the Appellant. The Department has accepted the self assessed returns of KFPL. Hence allegation that KFPL has issued invoices without movement of goods is not sustainable. 5.18 That the Department has not led any evidence to show that goods cleared by KFPL were diverted to some other party while the Appellant has only received invoices on which Cenvat credit was availed. In the absence of evidence, the allegation that only invoices have been received by the Appellant without goods is not sustainable. 5.19 That in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 10. Para 50 of the impugned OIO contains a chart showing details of how demand of duty and Cenvat credit has been calculated. The demand at Sr. No.1, 3 and 5 is on the basis of electricity consumption. The demand at Sr. No.2 and 4 is for M.S. Ingots which has been calculated on the basis of ledger pages. The demand at Sr. No.2 is on the basis of ledger pages not recovered from residence of Directors. The demand at Sr. No.4 is on basis of ledger pages and documents recovered from the residence. The demand at Sr. No.6, 7 and 8 is in respect of risers and runners alleged to have been manufactured but not accounted for based on the electricity consumption of the unit. The demand at Sr. No.9 is in respect of shortage in quantity of raw material found on 12.05.2006. The demand at Sr. No.10 (incorrectly numbered in 010 as 9) is on account of inadmissible Cenvat credit on receipt of scrap. We proceed to consider each of these separately. 11. The major portion of demand (C.Ex. duty Rs.1,83,40,802/- including education cess) is on the basis of electricity consumption. Demand for M.S. Ingots has been calculated by taking the electricity consumption as reflected in the electricity bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption 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. The Tribunal has also considered the report of Dr. Batra, which has been relied upon for making the allegations that there was higher electricity consumption. It appears that Dr. Batra in his report has observed that for the production of 1 MT of steel ingots, 1046 units electricity required". 12. In the light of the settled legal position, we are of the view that demand raised on the basis of electricity consumption is not sustainable and is set aside. Equivalent penalty on this ground is also set aside. 13. The demand of Rs.18,32,131/- towards Central Excise duty and Rs.36,643/- towards education cess (Total Rs.18,68,774/- has been raised on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned person who was engaged in preparation of invoice left early. However, in their defense reply and in the appeal memorandum, the Appellant have contended that there was no shortage in stocks of M.S. Scrap and officers have not carried out any weighment. There is no record in panchnama of any weighment having been done. The SCN is silent on the mechanism adopted by the Officers who carried out the search to arrive at the shortage. The counsel for the Appellant also contended that the Officers have shown shortage only to book a case against the Appellant and the fact that there is no shortage in stock of any other raw material or in the stock of finished goods established the bona fides of the Appellant. The ld. Counsel has also cited various judgments wherein it has been held that allegation of shortage in stocks on the basis of eye estimation only without actual weighment of stock is not sustainable. We find force in the arguments of the ld. Counsel. We set aside the demand on alleged shortage and the equivalent penalty imposed for the alleged shortages. 17. The demand at Sr. No.10 (wrongly mentioned as Sr. No.9) is in respect of inadmissible Cenvat credit on receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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