2009 (11) TMI 730 - AT - Central Excise

Summary

Issues:
Challenge to order confirming duty demand, calculation based on Director's statement, lack of cogent evidence, process of manufacture not considered.

Analysis:
The appellants contested an order by the Commissioner confirming a duty demand of Rs. 2,30,39,602/-, interest, penalty, and additional penalty on the Company's Director. The demand was related to alleged excess production of zinc oxide based on a mathematical calculation from the Director's statement. The challenge was primarily on the grounds of insufficient evidence supporting the findings and solely relying on total production calculation.

The impugned order primarily relied on the statement of the Director regarding the production percentage of zinc oxide from zinc ingots of 99.95% purity. The calculation was based on this statement, raw material issued for production from 2002 to 2007, and a formula using 70% of zinc dross to determine 84% zinc oxide output. However, the order did not mention any other evidence considered, such as buyer statements or additional materials. The manufacturing process involves heating raw materials to separate impurities before obtaining the final product, which could result in some zinc oxide loss. The order seemingly overlooked these critical process aspects in the duty liability calculation.

Notably, the Director's statement specified the yield of zinc oxide from 99.95% pure zinc ingots. Without a thorough investigation into the total production post-impurity separation, it was deemed inappropriate to demand the duty amount specified in the order. Consequently, the appellants were granted a stay on the duty, interest, and penalty until the appeal's resolution, as a prima facie case was established in their favor. The duty amount demanded in the impugned order was waived pending appeal disposal.