2018 (10) TMI 316 - AT - Central Excise

Clandestine removal - demand based on electricity consumption - Whether the demand based on estimated production per unit of electricity consumption is tenable? - Held that - The finding of the learned Commissioner is contrary to the findings in Appellants own case SATGURU CEMENT PVT. LTD., MR. JAGDISH AGARWAL AND OTHERS VERSUS CCE, INDORE AND OTHERS 2015 (7) TMI 460 - CESTAT NEW DELHI , where it was held that Merely on the basis of power consumption norm and that too when there are serious doubts about its correctness, duty demand cannot be confirmed against an assessee, when there is no other corroborative evidence of unaccounted purchase of raw-material and clearance of unaccounted production. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the demand based on estimated production per unit of electricity consumption is tenable?

Analysis:
The case involved appeals by the assessee-Appellants against an Order-in-Original passed by the Principal Commissioner, demanding Central Excise duty based on electricity consumption for manufacturing cement. The main contention was whether duty could be imposed solely on the basis of electricity consumption without concrete evidence of suppression or clandestine removal. The Appellants argued that duty cannot be levied based on electricity consumption alone, citing various case laws supporting their position. They highlighted previous Tribunal orders that set aside duty demands based on power consumption norms, emphasizing the need for tangible evidence to establish charges of suppression and clandestine removal.

The Appellants referred to specific Tribunal orders in their favor, where duty demands based on electricity consumption were deemed unsustainable. They emphasized that expert opinions indicated a range of electricity units required for cement production, challenging the validity of using a fixed unit value for duty calculation. The Appellants also pointed out discrepancies in the Commissioner's interpretation of previous Tribunal orders, asserting that the confirmation of demand on electricity consumption was explicitly set aside in prior judgments. They argued that power consumption for cement manufacturing varies due to multiple stages involved, such as crushing, powder making, clinker production, and cement manufacturing, affecting electricity usage under different conditions.

The Appellants highlighted the adjudicating authority's contradictory actions in passing two orders involving the same issue of confirming demand based on electricity consumption. While one order accepted the Tribunal's decision to set aside demands linked to power consumption, the subsequent order confirmed the demand solely on electricity consumption, indicating bias. The Department, represented by the learned DR, defended the findings of the impugned order, citing evidence of clandestine removal by the Appellants to justify duty demand based on electricity consumption. However, the Tribunal found the Commissioner's decision contrary to previous Tribunal judgments in the Appellants' favor, rendering the impugned order unsustainable. Consequently, the appeals were allowed, and the impugned order was set aside, granting the Appellants consequential benefits.

In conclusion, the Tribunal ruled in favor of the Appellants, emphasizing the need for concrete evidence to support duty demands based on electricity consumption for cement manufacturing. The judgment highlighted the importance of consistent interpretation of legal precedents and rejected the imposition of duty solely on estimated production per unit of electricity consumption without substantial proof of wrongdoing.