2015 (10) TMI 2351 - AT - Central Excise

Duty demand - Clandestine removal of goods - Demand on the basis of electricity consumption - Held that - Admittedly the search was conducted in the factory premises of the assessee on 30.3.2007 and certain records were seized which pertained for the period January, 2007 to March, 2007. The departmental officers without doing any other exercise, compared the clearance during that period for electricity consumption and made the basis to determine the manufacturing capacity of the plant and concluded that M/s. Satguru has cleared 18000 MT of cement without payment of duty in that period. Consequently, for the impugned period on the basis of the formula for manufacture of 1 MT of cement, how much electricity is consumed the whole demand is proposed. Infact in assessee s own case for the earlier period, this Tribunal vide Order No.52006 52008/2015 dated 25.06.2015, this Tribunal has held that demand on the basis of electricity consumption is not sustainable - demand on the basis of electricity consumption to manufacturer the cement for whole of the period is not sustainable. We further found that during the course of investigation, certain documents were resumed and on the basis of those documents, electricity consumption was derived, the same was made basis of demand which is set aside. - only basis for the demand of duty is electricity consumption but no comments have been made by the adjudicating authority to demand on the basis of documents seized during the course of investigation - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
Determining duty demand based on electricity consumption for cement manufacturing without considering other factors.

Analysis:
The case involved appeals by the assessee and co-noticees against an order alleging clandestine clearance of cement without duty payment. The dispute centered around the electricity consumption for cement production as the basis for determining the duty demand. The initial demand was based on a ratio of 74 units of electricity per MT of cement. However, the appellants contested this, citing expert opinions ranging from 212 to 230 units for electricity consumption per MT of cement. The Tribunal had previously held that duty demands solely based on electricity consumption norms were unsustainable, citing precedents. The impugned order was set aside due to lack of consideration for documents seized during the investigation and the discrepancy in production capacity claims. The Tribunal emphasized the need for a comprehensive examination considering all aspects before confirming duty demands. Consequently, the matter was remanded back to the adjudicating authority for a fresh decision after allowing the parties to present their case.

This judgment highlighted the importance of a holistic approach in determining duty demands, emphasizing the need to consider all relevant factors beyond just electricity consumption norms. The Tribunal's decision was guided by legal precedents and expert opinions, ensuring a fair assessment of the case. The remand to the adjudicating authority aimed to provide a thorough reconsideration of the allegations and defenses presented, ultimately ensuring a just outcome based on a comprehensive evaluation of the facts.