2016 (9) TMI 1492 - AT - Central Excise

Clandestine manufacture and removal - MS Ingots - main basis of allegation is that there has been higher consumption of electricity and ingot moulds, and as such, the respondent did not account all the production of excisable goods - Held that - Revenue contended that life cycle of mould was not correctly considered by the original authority. In the project report, the life of mould is shown as 240 heats. We find the allegation of excess production cannot be made on the basis of project report or presumed life span of moulds without any corroborative evidence. Electricity consumption - Held that - In the absence of categoric evidence regarding excess serviceable life of ingot moulds, the demand cannot be sustainable merely on the basis of higher consumption of electricity. There is no justification to interfere with the findings of the original authority - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropping proceedings for alleged clandestine manufacture and clearance of excisable goods. Allegations of suppressed production and short payment of duty. Examination of higher consumption of electricity and ingot moulds. Dispute over excess production based on weight of moulds. Clarification on electricity consumption variations. Reliance on previous tribunal decisions and court judgments.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI stemmed from an order by the Commissioner of Central Excise, Raipur, dated 28-4-2010, concerning alleged clandestine manufacture and clearance of excisable goods. The respondents, engaged in manufacturing MS Ingots, were accused of suppressing production and short payment of duty. A show cause notice (SCN) was issued demanding Central Excise duty of &8377;80,80,709/- along with proposed penalties. The Commissioner dropped the proceedings against the respondents, leading to the Revenue's appeal and a cross-objection by the respondent.

The main contention against the respondent was the alleged suppression of excisable goods production and duty payment due to clandestine removal. The case revolved around higher electricity consumption and ingot mould discrepancies. The original authority found the weight variation of ingot moulds made generalizations unsustainable for alleging excess production. The Revenue argued that the mould's life cycle was not correctly considered, citing a project report showing a 240-heats life span. However, the Tribunal agreed with the original authority, emphasizing the need for corroborative evidence before alleging excess production based on presumed mould life.

Regarding monthly electricity consumption, the original authority examined details, including errors in the balance sheet and variations due to factors like thermal efficiency and raw material nature. After considering evidence, the original authority concluded that without categorical proof of excess mould life, the demand based on higher electricity consumption was unsustainable. The Tribunal upheld this finding, referencing a previous decision and subsequent court dismissals. The respondent's reliance on other tribunal decisions was also affirmed, supporting the case's outcome.

Based on the consistent tribunal rulings and the detailed analysis of the case facts, the Tribunal found no grounds to overturn the original authority's findings. Consequently, the appeal by Revenue was dismissed, and the respondent's cross-objection was disposed of, with the order pronounced on 29-9-2016.