2017 (5) TMI 558 - AT - Central Excise

Clandestine manufacture and removal - the demand was confirmed on the basis of variation in electricity consumption - case of appellant is that the test check of the electricity consumption was carried out not during the relevant period but much subsequent to the period for which the demand was raised, and is thus not relevant for the purpose - Held that - merely because of variation in the electricity consumption between the actual consumption and the consumption arrived at on the opinion of some expert, the demand cannot be confirmed - The demand on the basis of electricity consumption cannot be confirmed particularly in the facts of the present case when it is clear from the calculation chart itself that in some of the months the production is coming short as per the calculation of the production on the basis of 600 unit PMT and in most of the months the production is coming on higher side. As regards demands raised based on kachcha chit, it is found that the demand was confirmed for the period 2002-03 to 2005-06 whereas kachcha chit shows the entry for the period 18.6.2006 to 27.6.2006. Therefore, this evidence is not relevant to the period of the demand in the present case, the same cannot be relied upon. There is no evidence on record which can establish the clandestine removal of the goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Calculation of duty demand based on electricity consumption.
2. Relevance of evidence from the kachcha chit recovered.
3. Admissibility of partner's statement on electricity consumption.

Analysis:
1. The judgment addressed the calculation of duty demand based on electricity consumption. The adjudicating authority confirmed the demand against the appellant by comparing the actual electricity consumption with the consumption required for production, leading to a differential demand calculation. The appellant argued that the test check of electricity consumption was not timely, and the 600 unit PMT adopted by the authority was incorrect. Citing various judgments, the appellant contended that demand cannot be solely confirmed based on electricity consumption variation. The tribunal agreed, emphasizing the arbitrary nature of the 600 unit PMT and referencing previous judgments like R.A. Castings Pvt. Ltd. and SRJ Peety Steel Pvt. Ltd. to support the decision.

2. The relevance of evidence from the kachcha chit recovered was also discussed. The appellant highlighted that the kachcha chit pertained to a period beyond the demand period and explained that the clearance during that time was within exemption limits. The tribunal concurred that the evidence was not relevant to the demand period under consideration, thus dismissing its significance in the case.

3. The admissibility of the partner's statement on electricity consumption was another crucial aspect. The partner had admitted the correctness of the 600 unit PMT, which the revenue relied upon. However, the tribunal found the calculation arbitrary based on production variations. Ultimately, the tribunal ruled in favor of the appellant, stating that there was no evidence of clandestine removal of goods, rendering the impugned order unsustainable and setting it aside. The appeal was allowed with consequential relief, if applicable, as per the law.