2018 (8) TMI 778 - AT - Central Excise

Clandestine manufacture and removal - Ingots - demand based upon the electricity consumed by the respondent - Held that - Apart from making general comments that the Adjudicating Authority has not applied its mind to the facts of the case inasmuch as there was enough evidence on record to confirm the demand against the assessee - Revenue did not contend that the declaration of law in the case of R.A. Castings is not applicable to the facts of the present case. The demand was primarily based upon electricity consumption, which issue stands decided right upto the Supreme Court in the case of R.A. Castings 2011 (1) TMI 1302 - SUPREME COURT OF INDIA , where it was held that excess production of steel ingots, as proof of clandestine removal, could not be estimated based only on higher electricity consumption. Appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue appeal against dropping demand of around ?6.53 crores based on clandestine manufacture and clearance of final product due to electricity consumption.

Analysis:
The Revenue filed an appeal against the order of the Commissioner, Central Excise dropping the demand of ?6.53 crores against the respondent. The respondent was engaged in the manufacture of Ingots based on electricity consumption, leading the Revenue to suspect clandestine activities. The Revenue initiated proceedings against the respondent based on a show cause notice proposing to confirm the demand and impose penalties.

During adjudication, the Commissioner considered similar proceedings involving another assessee, M/s R.A. Castings Pvt. Ltd., where the demand was raised based on the opinion of Shri Dr. Batra and electricity consumption. However, the Tribunal in the case of M/s R.A. Castings held that clandestine activities cannot be confirmed solely based on the opinion of Shri Dr. Batra and electricity consumption. This decision was upheld by the Hon’ble Allahabad High Court and the Hon’ble Supreme Court, leading to the dropping of the demand against the respondent in the present case.

In the present appeal, the Revenue contended that the Adjudicating Authority did not apply its mind to the facts of the case and that there was enough evidence to confirm the demand. However, the Tribunal noted that the demand was primarily based on electricity consumption, a matter already settled by the Supreme Court in the case of R.A. Castings. The Revenue failed to establish any distinguishable facts in the present case from the case of R.A. Castings. Therefore, the Tribunal found no justifiable reason to interfere with the Commissioner's order and rejected the Revenue's appeal.

In conclusion, the Tribunal upheld the dropping of the demand against the respondent, as the Revenue failed to demonstrate any valid grounds for challenging the decision based on settled legal principles established in previous cases. The appeal was dismissed, affirming the Commissioner's order.