TaxTMI 
TaxTMI 
2025 (5) TMI 479
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....verage of 2.08 M.T. of Iron Ore consumption on the manufacture of 1.00 M.T. of Sponge Iron. The officers also verified the consumption of electricity and found that the consumption of electricity per M.T. was 139.38 KWH. According to the department, the consumption of Iron Ore as well as Electricity was very high and according to them the standard consumption pattern would be 1.67 M.T. of Iron Ore and 75.100 KWH of Power if the Fe content in the Iron Ore ranges from 62% to 65%. The department relied upon the report of M/s. Popury Engineering & Consultancy Services and report of M/s. Industrial Technical Consultant of Raipur to content 1.67 M.T. of Iron Ore would be required to manufacture 1.00 M.T. of Sponge Iron and consumption of electricity would be in the range of 70 to 100 KWH. Accordingly, the officers estimated the production of Sponge Iron as 38540.610 M.T. Since the DSA figure was 30987.870 M.T., the Department assumed that a quantity of 7552.740 M.T. of Sponge Iron (38540.610 - 30987.870) has been clandestinely manufactured and cleared on without payment of Central Excise duty. Reference to the recorded statement of Sri Debasish Nayek was made though the said statement ha....
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....ent for confiscating the goods, more particularly when alleged non-accountal of goods were not meant for removal without payment of Central Excise duty. The Ld. Commissioner however, confirmed the demand and charged interest and imposed penalty and confiscated the said goods with the option to redeem the same on payment of fine of Rs.5,00,000/- and also imposed penalty of Rs. 1,32,233/- equivalent to duty. Being aggrieved, the appellant is before the Tribunal. 5. The Ld advocate appearing on behalf of the appellant makes the following submissions : 5.1 The proceeding was initiated on the basis of assumption and presumption and Order passed on such proceeding cannot be maintainable in law. The demand has been raised on the basis of estimated input output ratio and on theoretical calculation and on the basis of third-party opinion. There are no fixed norms for manufacturing the Sponge Iron and depends on various factors which has not been dealt with in the Order. 5.2 The submissions of the appellant under decisions cited in the reply to the show cause notice specially contending that no experiment was made with the particular factory of the appellant in respect of the circumstance....
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....98/2025 dated 11/02/2025, this Bench has held as under:- 17. On going through the relevant portion of the Show Cause Notice and the Order In Original [ Para 7.9 and 7.9 ], we find that the Revenue has considered the input / output ratio of 1 : 1.67 as sacrosanct based on the expert opinion of Institute of Mineral Technology, Govt of India and another opinion of Popuri Engineering & Consultancy Services, Hyderabad. There is nothing to indicate that the Revenue has made independent study of the working of the appellant's plant to take some sample outputs to study the pattern of input / output ratio. As per the data of Purchase of Iron Ore Fe Content, Grade-wise Coal purchased, Input / output ratio declared by the appellant in their Annual Returns, reproduced in the previous paragraphs by way Table, the year-wise details show that the input / output ratio ranges between 1 : 1.92 in 2008-09 to 1 : 1.87 during the period April 2009 to February 2010. The contents of the Table are all declared figures and are verifiable. There is nothing to indicate that due consideration was given for these submissions by the Adjudicating authority before coming to his conclusions. His conclusions seem....
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....uction of 1 M.T. of Sponge Iron. ii) M/s Industrial Technical Consultant, Raipur, who are experts in the field of designing/drawing and providing sponge iron technology have opined that the consumption to production ratio is 1.67:1 and the average power consumption is in the range of 90 KWH for production of 1 M.T. of sponge Iron. 2.5. During the period April, 2007 to January, 2010 (excluding the month form July, 2008 to October, 2008), the Noticee has recorded average consumption of 2.32 M.T. of Iron Ore for manufacture of 1 M.T. of Sponge Iron. Taking in account of the input-output ratio of 1.67:1 as per expert opinion, the estimated production of sponge iron comes to 58481.71 M.T., but the Sponge Iron Production recorded in the Daily Stock Account of the of the Noticee was found to be 42045.00 M.T. Therefore, it appeared that, 16436.71 M.T. of sponge iron has been manufactured surreptitiously, which has been removed clandestinely from their factory without payment of duty. 2.8. Thus, from the above, it is ascertained that ASPL has suppressed production of 16436.71 M.T. of sponge iron involving Central Excise duty of Rs. 1,83,27,914/- (including Cess) and removed the same cla....
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....nd also imposed penalty mainly based on the production approximation and on the statement of Director of the unit, Shri Agarwal, who is one of the appellants in this case. 6.2 The department has not gone beyond the approximation and the statement of Shri Agarwal. Any prudent person would not so conclude on extra production by approximation and by a mere statement of the Director of the company. Unless there are further corroborations in the form of documentary evidences, which could be like despatch details for the production, receipt details of the said material, transactions of the sale money, transportation details of such goods, details of additional consumption of electricity for such suppressed production a prudent individual would not agree with the present conclusions of the Revenue. There is nothing on record from the Revenue side to come to a reasonable conclusion to say that there has been preponderance of probability of such suppressed production on the part of the appellant. The evidences in the form of approximation and averaging production as 77.6% and one statement of Shri Agarwal, Director of the appellant company cannot be called a prudent conclusion of the prod....