S.L. Peeran, Member (J) - (1.)THESE are two Revenue appeals against the order in Appeal No. 10 and 11/2001, dated 28 -2 -2001 by which the Commissioner (Appeals) has set aside the order in original passed by the Additional Commissioner of Central Excise confirming the duty demand of Rs. 4,13,391/ - and penalty of Rs. 2,55,0007 - on alleged clandestine production and clearance of Iron and Steel Rerolled products including the penalties on Shri Murali imposed under Rule 209A of the Central Excise Act, 1944. The main contention of the Revenue is that the Commissioner (Appeals) has not examined the evidence on record including the corroborative evidence pertaining to the suppression of production in the form of power consumption, cost of production, etc. as stated in the tabulated annexed to the show cause notice. The Commissioner (Appeals) has not considered the other grounds taken in support of the order -in -original. Ld. Commissioner (Appeals) in Para 10 of his order has observed that it is not possible to consider the so called corroborative evidence of electricity consumption and proportionate production of steel. The average consumption per metric tonne varies from 336 to 619 units of electricity. He has held that this does not enable him to come to any definite conclusion regarding the electricity consumed and the production of steel. Besides, there are other factors like the efficiency of the furnace itself in producing the required quantity of steel, for a given input of electricity. He has also held that this evidence cannot be totally relied upon. Further, if power consumption as pictorially depicted in graphical enclosures to the show cause notice is to be relied upon them, suppressed quantity of production of impugned goods should have been around 1800 M.T. instead of 194.83 M.Ts as alleged in the show cause notice. This type of corroborative evidence is highly fragile and notional and he is unable to rely on the same. Revenue is aggrieved with this order and have relied on several pieces of evidences including the corroborative evidence of electricity consumption figures.
(2.)SHRI A. Jayachandran, Ld. DR appeared for the Revenue and argued on the basis of the grounds in Memo of Appeal and submits that although the Additional Commissioner had observed in Para 23 at page 12 of the order that no allegation is made on the basis of power consumption but he had not taken into consideration the various allegations made in the show cause notice and the annexures which clearly showed the power consumption to produce the suppressed clearances. He submits that this matter is required to go back to the Additional Commissioner for de novo consideration to re -assess the matter in the light of the Hon'ble Apex Court judgment rendered in the case of Triveni Rubber and Plastics v. CCE reported in 1994 (73) E.L.T. 7 (S.C.) wherein the Apex court held that demand raised on the basis of the electricity consumed and confirmed by the Collector and the Tribunal cannot be faulted at and the same is required to be confirmed.
(3.)APPEARING on behalf of the Respondents, ld. Counsel Shri N. Venkatraman opposed the prayer for remand and submits that the Commissioner (Appeals) order is totally correct and proper. He submits that the Commissioner has gone through all the citations, records, and evidence and has noticed that there is no procurement of raw materials for production of excisable goods and clearances without payment of duty and he has also noticed that the deposition of the witnesses were all in favour of the assessee as they have retracted, and had not substantiated their earlier statements in the cross examination. He has also noted that the reliance based on the power consumption does not support and help the department in the absence of any corroborative material evidence. Ld. Counsel very strongly pleaded that the Revenue itself has in their appeal memorandum stated that power consumption not the sole ground for confirmation of the demands. He also referred to the Additional Commissioner's findings that power consumption is not the only factor. It is his submission that the Revenue has dropped charges based on the power consumption and therefore, they had also not filed any appeal on the Additional Commissioner finding to proceed on the basis of power consumption and hence that plea cannot be taken by the Bench for remanding the case. He refers to the grounds taken up by the Revenue before the Bench wherein the Revenue relied only on the statement recorded from the Bill Traders. He points out that the Commissioner (Appeals) clearly noted that the evidence of Bill Traders is not an corroborative evidence and that does not support the Revenue case. He submits that Revenue has not supported the charges of clandestine production and clearance of 194 M.Ts. He also refers to the chart which is indicated in the show cause notice pertaining to the power consumption and submits that the Revenue has not quantified the demand on the basis of power consumption. Therefore, he submits that power consumption cannot be the sole basis for confirming the demand when the Revenue has not substantiated their case with regard to the receipt of raw materials and clearance of the final production of the excisable goods to any buyers. He submits that clandestine removal is not established and that the Revenue cannot base the case solely on one factor but has to produce conclusive evidence of receipt of raw materials, production, clearance of final product to discharge the allegation of clandestine removal. He made a valid attempt to distinguish the Apex Court judgment and submitted that in that case Revenue had quantified the production on the basis of the power consumption which is not the case in the present situation. Hence, the Apex Court judgment is not applicable to the facts of the case. He prayed for dismissal of the Revenue appeal. Ld. Counsel Shri Sundaranathan, submitted that penalty cannot be imposed on Shri Murali. There is no violation under Rule 209A of the CEA. He submitted that there is no proposal in the show cause notice for confiscation of the goods. Shri Murali was charged on the ground that he was aided and abetted in the manufacture and clearance of final product without payment of duty. He submits that there is no evidence against him. He relies on the judgment rendered in the case of D.M. Gears P. Ltd. v. CCE, Delhi reported in 2002 (141) E.L.T. 514. He submits that there is no order for confiscation and hence penalty cannot be imposed in the matter.
I have perused the entire records and the submissions made by both sides. I have seen the judgments relied by the Revenue rendered in the case of Triveni Rubbers and Plastics (supra) which has been followed by this Bench in the case of Calicut Rubber Co. v. CCE reported in 1996 (81) E.L.T. 320. It is now well settled that Revenue is required to be to produce conclusive, cogent and reliable evidence to prove the allegations of clandestine removal. In this case the statements made and recorded from the Bill Traders have not been sustained during the course of cross examination. For that reason the Commissioner has dropped the proceedings. Further I notice the Additional Commissioner has also recorded that the electricity consumption is not the main piece of evidence on which the allegations have been made. The Commissioner (Appeals) has also recorded that the electricity consumption cannot be considered as the only evidence to prove the case. On my referring the show cause notice and annexures, I notice that the appellants have not disputed the consumption of electricity to the extent of 11972620 units for the period March - April 94 and July - August, 1996. The Revenue has alleged that the said annexure shows that the production accounted was 258 to 495; the average consumption per M.T. has been shown as 462 and average consumption during 93 -94 has been shown as 280 and the difference arrived at is 182 tonnes: percentage of difference has been shown as 65. The assessee has not disputed the electricity consumption. There is prima facie evidence to show excess consumption of electricity. Although the Additional Commissioner has recorded that this is not a factor for arriving the clandestine removal but in the Apex Court judgment the consumption of electricity has been held to be an important factor for confirming the demand. This has been the reason for remanding the case of Calicut Rubber Co. (supra) for de novo consideration. Although the appellants have shown that there is corroborative evidence however, they are required to substantiate the factor of electricity consumption for the production and clandestine removal of the goods. Therefore, I set aside the impugned order and remand the matter for de novo consideration. The assessees' argument and grounds pertaining to the electricity being not the factor for confirmation of demand and Revenue has given up this point is required to be taken into consideration. The Revenue should establish with figures of consumption of electricity the fact of clandestine production and clearance of goods with other supporting evidence. The aspect pertaining to the levy of penalty on Shri Murali is also left open for reconsideration by the original authorities. The assessees are entitled to take all legal pleas pertaining to their stands as has been argued before me before both lower authorities in de novo proceedings. The issue is left open for detailed consideration by the original authority. The matter shall be decided expeditiously.