2016 (6) TMI 154 - AT - Central Excise

Clandestine removal - Estimation of production - Denial of SSI Exemption - Comparison of the power consumption during two periods, i.e., one, when the assess was not using the electric motors and second, when they were admittedly using - Manufacture of Tin Containers with the aid of power prior to May, 2002 as also with the Hand Operated Plants - Held that - there is nothing on record to reflect upon the electricity consumption per motor, per month and the number of motors being used by the assessee during a particular month. It is simplicitor picking up of the unit s consumption of the assessee from the electricity bills and based upon that, trying to come to the conclusion that electric motors were being used by the assessee. As rightly observed by Commissioner (Appeals) such use of electricity can be on account of several other factors and cannot have a direct connection or nexus with the use of electric motors in the assesse s factory. Further, the respondents have also placed on record before the authorities below that electric motors being used by them prior to May, 2001, stands sold by them under the cover of invoices. The same were re-purchased in the December, 2002 under the cover of the invoices. Revenue has not bothered to examine the purchaser in the first case and seller in the second case so as to controvert above the fact. If there is no dispute by the Revenue in respect of sale and purchase of electric motor, we find that the respondents have made out their case on merits in their favour. We find no reason justifiable enough to interfere in the impugned order of Commissioner (Appeals). - Decided against the revenue

Summary

Issues:
1. Central Excise Duty exemption for Tin Containers manufactured with or without power.
2. Alleged misuse of power in manufacturing Tin Containers.
3. Discrepancies in power consumption and the impact on the case.

Central Excise Duty Exemption:
The case involved the manufacturing of Tin Containers falling under a specific subheading. The judgment highlighted that Tin Containers produced on Hand Operated Plants without power were exempt from Central Excise Duty as per a particular notification. However, if manufactured with power, they required the benefit of a small-scale exemption notification.

Misuse of Power:
The appellant was found to have manufactured Tin Containers using power before a specified date. The factory was visited, and it was discovered that power motors were present on the premises. The partner's statement indicated that power was used before a certain date, then discontinued, and later resumed. The Revenue initiated proceedings based on discrepancies in power consumption, leading to a demand for duty and penalties.

Discrepancies in Power Consumption:
The Original Adjudicating Authority's order was challenged before the Commissioner (Appeals), who set it aside primarily due to discrepancies in electric consumption not being conclusive evidence of power motor usage. The Commissioner noted the sale and repurchase of electric motors by the appellant, supported by invoices. The judgment emphasized the lack of verification by the Revenue regarding these invoices. The Tribunal upheld the Commissioner's decision, stating that mere electricity consumption variations were insufficient to prove the use of electric motors. The absence of evidence disputing the sale and purchase of electric motors favored the appellant, leading to the rejection of the Revenue's appeal.