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TMI Blog2025 (3) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER ORDER : [ PER SHRI ASHOK JINDAL ] The appellants are in appeal against the impugned order wherein demands of Rs.23, 52, 292/- on sale of Ziking (slag) and Rs.6, 42, 584/- on account of shortage of stock of Silico Manganese have been confirmed against the appellants. 2. The facts of the case are that the appellant-company is a manufacturer of Silico Manganese and uses raw materials viz. Manganese Ore, Dolomite and steam coal for such manufacture. Officers of the DGGI, Regional Unit, Jamshedpur, on the basis of purported intelligence, conducted searches at the factory premises, office and residence of the Director of the appellant-company (appellant No. 2 herein). During the course of search of the office premises, from the laptop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of alleged shortage of goods. 3.2. The appellants are challenging, by way of these appeals, the confirmation of demand of duty of Rs.23, 52, 292/- on sale of Ziking (slag) and the confirmation of demand of duty of Rs.6, 42, 584/- on account of shortage of goods. 4. The Ld. Counsel appearing on behalf of the appellants submits that Ziking (slag) is a by-product emerging during the process of manufacture of Silico Manganese, which is not a dutiable product. Therefore, it is contended that no demand is sustainable on clearances of Ziking. It is further submitted that the ld. adjudicating authority has arbitrarily computed the demand on Ziking by considering that Ziking is sold at Rs.45, 000/- per Metric Tonne (M.T.). As no such evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stock taking was done on eye estimation basis alleging that 114.13 M.T. of Silico Manganese on the day of visit was found short. He submits that in fact, the officers came on the said date and came to the factory premises at 1:00 p.m. and concluded the search proceedings by 5:00 p.m.; it is submitted that in four hours, the officers first initiated the search proceedings by calling the Panch witnesses showing search warrants to the appellant, taking their signatures on the warrant, and thereafter, taking rounds of the factory for searching each and every corner of the premises which is spread over 2.7 acres of land. It is stated that the Officers had recovered various records of procurement of raw material, records of production, sale ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions. 7. In this case, the fact which is not in dispute is that this Ziking (slag) emerges during the course of manufacture of the final product, which may be a low grade Silico Manganese. However, it is a fact on record that Ziking (slag) is a by-product and not the final product manufactured by the appellant. In these circumstances, we rely on the decision of this Tribunal in the case of Monnet Ispat and Energy Ltd. (supra) wherein the following observations have been made:- "5. It is an admitted fact that Silico Manganese slag and Ferro Chrome slag emerge involuntarily during the course of manufacture of the final product. Since, the appellant had no intention to manufacture slag, the same, in my opinion, should not be considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully considering the submissions made by both sides, I find that only difference in the facts of the present case and the decisions relied upon by the learned advocate is the addition of Explanation to Section 2(d) of the Central Excise Act, w.e.f 10-5-2008. However, I find that the Board's Circular No. 904/24/2009-CX., dated 28-10-2009 strongly relied upon by the lower authorities stands struck down by the Hon'ble Allahabad High Court in the case of Balrampur Chini Mills Ltd. v. UOI reported as 2014 (300) E.L.T. 372 (All.). Further, vide a recent decision, the Hon'ble Bombay High Court in the case of Hindalco Industries Ltd. - 2015 (315) E.L.T. 10 (Bom.) has set aside the Larger Bench decision of the Tribunal reported at 2014 (308) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing physical verification of the stock and stock taking was done only on eye estimation basis. We are of the view that merely on eye estimates, shortage of stock cannot be alleged. In view of this, we hold that on the said shortage, the demand of duty is not sustainable against the appellants. 10. In view of these findings, we set aside the impugned order qua confirmation of demands of duty of Rs.23, 52, 292/- on sale of Ziking (slag) and Rs.6, 42, 584/- on account of alleged shortage of goods. 10.1. As no demand is sustainable against the appellant, we hold that no penalty is imposable on the appellants. 11. In view of this, we allow the appeals filed by the appellants, with consequential relief, if any, as per law. ( Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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