2010 (9) TMI 1240 - AT - Central Excise

Summary

Issues Involved:
1. Alleged suppression of production and clandestine clearance of goods by SSPL.
2. Capacity of the furnace and its impact on production.
3. Reliability of private records versus statutory records.
4. Alleged clandestine clearance of MS ingots to KSPL.
5. Shortage of raw material (MS scrap) and its implications.

Summary:

1. Alleged Suppression of Production and Clandestine Clearance by SSPL:
The Tribunal examined the Commissioner's findings that SSPL had suppressed production and cleared goods clandestinely without payment of duty. The Commissioner based his findings on private registers recovered from SSPL, which showed the number of heats and production details. The Commissioner confirmed the demand of Rs. 27,34,645/- based on the ingot movement register from SSPL to KSPL. However, the Tribunal found discrepancies in the production records and noted that the capacity of the furnace was 2.1 MTs, as per the manufacturer's invoice and the Commissioner's determination. The Tribunal remanded the matter for re-examination, emphasizing the need to consider the production capacity and other related documents.

2. Capacity of the Furnace and Its Impact on Production:
The Commissioner found that the furnace installed in SSPL had a capacity of 2.1 MT per heat, as reflected in the purchase invoice issued in 1987 and confirmed by the jurisdictional Commissioner in 1997. The Tribunal noted that there was no evidence of alteration to enhance the furnace's capacity. The Tribunal observed that the actual production could not have been worked out using a capacity of 3.8 MT per heat, as suggested in the show cause notice. The Tribunal emphasized the need to verify the actual quantity produced during the relevant period.

3. Reliability of Private Records Versus Statutory Records:
The Commissioner granted the benefit of doubt to SSPL regarding excess production reflected in private records, as there was no corroborative evidence of actual clearance, sale, and purchase by particular persons or removal through any transporter. The Tribunal noted that the private records indicated a higher number of heats and production compared to statutory records. The Tribunal found that the private records could not be entirely relied upon without corroborative evidence.

4. Alleged Clandestine Clearance of MS Ingots to KSPL:
The Commissioner held that the department had not proved the allegation of clandestine clearance of 4250.243 MTs of MS ingots to KSPL. There was no evidence of receipt of the ingots by KSPL, and the weighment slips did not show the related buyers. The Tribunal noted that the revenue had not raised any valid challenge to the Commissioner's findings and emphasized the need to examine whether SSPL cleared ingots clandestinely to KSPL in addition to the alleged clandestine production.

5. Shortage of Raw Material (MS Scrap) and Its Implications:
The Commissioner found that the shortage of 1039.450 MTs of MS scrap was explained by SSPL as due to non-accountal of scrap used for manufacturing moulds and burning loss. The Tribunal noted that the department did not inquire into this aspect and emphasized the need to give SSPL another opportunity to provide evidence supporting their claim.

Conclusion:
The Tribunal remanded the matter to the Commissioner for fresh adjudication, emphasizing the need to follow principles of natural justice and re-examine the issues based on the evidence. The appeal filed by the Revenue was allowed by way of remand.