SUNITA ISPAT PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, MEERUT
LAWS(CE)-2015-1-30
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 14,2015

Appellant
VERSUS
Respondents

JUDGEMENT

Ashok Jindal, Member (J) - (1.)THE appellants are in appeals against the impugned order confirming duty along with interest and various penalties on the appellant and co -appellants.
(2.)BRIEF facts of the case are that the main appellant M/s. Sunita Ispat Ltd. is engaged in the manufacture of MS ingots from scarp. The remaining three co -appellants are partners thereof. On 3.8.07 investigation was conducted in the factory of the appellant and at the residence of Shri Anil Kumar Agarwal, co appellant. During the course of investigation, it was found that there was a shortage of finished goods of 96.93 MT of MS ingots and from the residence of Shri Anil Kumar Agarwal certain katcha chits were found which were showing the purchase of scrap during the period from January, 2007 to March, 2007 indicating a purchase of about 437.58 MT of scrap. It was also observed that power consumption for one MT of MS ingots varies from 990 units to 3703 units per MT. Therefore, a case has been booked against the appellant on account of manufacturing of MS ingots on the basis of consumption of electricity as per the report of Dr. N.K. Batra, Professor, IIT Kanpur that for manufacture of one MT of MS ingots 1046 units of electricity is required. On the basis of consumption of electricity, the production of appellant was calculated for the period 2005 - December, 2007 and demand of duty of Rs. 2,26,80,122/ - was sought to be demanded from the appellant. For shortage of 96.93 MT of MS ingots found during the course of investigation, allegation was made against the appellant on the premise that as these goods were found short, therefore they have been removed clandestinely, therefore duty of Rs. 3,03,523/ - was also sought to be appropriated which has been paid by the appellant during the course of investigation. Penalties were also proposed to be imposed on the appellants. During the course of adjudication, it was held that on the basis of electricity consumption demand is not sustainable to allege that goods have been removed by the appellant clandestinely. Therefore, demand of Rs. 2,26,80,122/ - was dropped but on the basis of katcha slips found at the residence of Shri Anil Kumar Agarwal for procurement of scrap., it was observed in the impugned order that same has been used to manufacture MS ingots which have been cleared clandestinely, therefore the demand of duty of Rs. 13,70,150/ - was confirmed along with interest and demand of Rs. 3,03,523/ - was also confirmed on account of shortage of finished goods which were removed clandestinely and various penalties on the appellants have been confirmed. Aggrieved from the said order, appellant is before me.
Learned Counsel for the appellant submits that as in this case the main case made against the appellant is that they have clandestinely manufactured excess quantity of MS ingots by utilizing the electricity and goods have been removed clandestinely, the said charge against the appellant has been set aside by the adjudicating authority holding that the quantum of electricity consumption on the basis of report of Shri N K Batra, Professor of IIT, Kanpur is not authenticated report and electricity consumption cannot be determined on the formula derived from that report as held by Apex Court in the case of R A Casting [2011 (269) ELT A 108 (SC)]. He further submits that as the major demand sought to be confirmed against the appellant on account of clandestinely removal has been set aside, therefore the allegation of clandestine manufacture and removal is not sustainable and demand of duty of Rs. 13,70,150/ - is to be set aside as there is no demand proposed in the show cause notice on account of katcha chits found during the course of investigation for purchase of scrap. He further submits that there is no admission on behalf of the appellant that shortage of finished goods found during the course of investigation has been removed clandestinely, there is only a presumption by the Revenue authorities. Therefore as appellant is not contesting the demand of duty, penalties are not imposable. He relied on the decision of Hon'ble High Court of Allahabad in the case of Meenakshi Castings [2011 (274) ELT 180(Allahabad)] and also submits that in this case no interest has been demanded on finished goods found short in their factory, therefore charge of clandestine removal stand unproved. In these circumstances, it is prayed that impugned order except confirming demand of duty with regard to shortage of finished goods is required to be set aside.

(3.)ON the other hand, learned AR submits that in this case during the course of investigation, katcha chits were found for purchase of scrap which ultimately be used by the appellants in manufacture of final product i.e. MS ingots and same has been removed clandestinely and that charge made against the appellant for clandestine manufacture for excess manufacturing of goods by using excess electricity and same has been clandestinely cleared from the factory, both the adjudicating authority found that on the basis of electricity consumption, the charge of clandestine removal is not sustainable but for katcha slips found in the custody of Shri Anil Kumar Agarwal during the course of investigation is evident for procurement of inputs clandestinely and after manufacturing of finished goods, same has been cleared clandestinely. Therefore, duty demand of Rs. 13,70,150/ - is to be confirmed against the appellant along with interest and penalty. For the demand of Rs. 3,03,523/ - he submits that as appellant has himself admitted the shortage of goods and duty paid thereon, therefore, department is not required to prove that these goods were removed clandestinely and penalty is rightly been imposed on the appellant as held by Hon'ble High Court of Allahabad in the case of Bajrang Petro Chemicals(P) Ltd. v. CCE Kanpur [ : 2014 -TIOL -2254 -HC -ALL -CX]. He further submits that penalties on the co -appellant are also imposable as held by decision of the Tribunal in the case of Nashik Strips Pvt. Ltd. v. CCE, Nashik as reported in [ : 2010 (256) ELT 307 (Tri -Mum)], therefore impugned order is to be upheld.
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