2019 (2) TMI 1483 - AT - Central Excise

Clandestine removal - non-speaking order - Revenue has stated that Commissioner (Appeal) has not considered various evidences arrive while dropping the demand - variation in the consumption of electricity - Held that - The matter was remanded back to the adjudicating authority to render a finding in respect of power consumption specifically. The respondents have made detailed submissions in this regard, however, adjudicating authority has dealt the entire submission on the issue of power consumption - For making such observations, Original Authority has relied upon the Order-in-Original which has been set aside by the Commissioner (Appeal) long back and the order of the Commissioner (Appeal) was set aside by the Tribunal and matter remanded back. It is not understood how adjudicating authority could have relied upon the findings rendered in the order which has been set aside. when the matter was remanded for re-consideration of the same. Having not been done so, the Revenue cannot be aggrieved by the order of Commissioner (Appeal). Since adjudicating authority has not rendered any finding in respect of the issue for which the matter was earlier remanded back to him. We hold that he was not in a position to give any adverse finding in this regards. We are firmly of the view that the backbone of the case made against the appellants is variation in power consumption. Since adjudicating authority has not found it fit to render any finding in this respect we draw adverse inference on it as has been done by the Commissioner (Appeal) - All the other evidences have been well considered by the Commissioner (Appeal) in his order for dropping the demands. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Demand of duty and penalties under various sections and rules of the Central Excise Act and Rules.
2. Allegations of clandestine removal based on higher electricity consumption.
3. Consideration of various evidences like weighment registers, statements of drivers, and dealers.
4. Non-accounting of raw materials and finished goods.
5. Remand order compliance regarding power consumption analysis.

Issue-Wise Detailed Analysis:

1. Demand of Duty and Penalties:
The Revenue filed appeals against the Order-in-Appeal passed by the Commissioner (Appeal), which set aside the demand of ?29,82,117/- and associated penalties imposed by the Additional Commissioner. The Additional Commissioner had initially demanded this amount under Section 11A(1) of the Central Excise Act, read with relevant rules, and imposed penalties under Sections 11AC and 11AB, and Rules 25 and 26 of the Central Excise Rules.

2. Allegations of Clandestine Removal Based on Higher Electricity Consumption:
The primary evidence for the allegation of clandestine removal was the higher consumption of electricity. The Revenue argued that the higher power consumption indicated higher production, which was not recorded in the production registers. This was supported by the letter from M/s. Peekay Steels, stating that power consumption for similar goods was between 10 to 120 units. The Tribunal had previously remanded the case for reconsideration of this evidence, directing the Original Authority to specifically address the power consumption issue.

3. Consideration of Various Evidences:
The Revenue contended that the Commissioner (Appeal) did not properly consider the weighment registers, statements from drivers, and other evidences. These included:
- The receipt of 3570 MT of M.S. Steel ingots from M/s. Southern Ispat Ltd, while only 1069.87 MT was accounted for, suggesting unaccounted production and removal.
- Statements from the Manager of M/s. Southern Ispat Ltd and drivers confirming the transportation of ingots.
- Weighment receipts for outgoing finished goods not supported by invoices.
- Statements from dealers indicating clandestine removal.

4. Non-Accounting of Raw Materials and Finished Goods:
The Revenue highlighted that the assessee did not account for certain raw materials, such as furnace oil, in their registers, which was used for clandestine manufacture. The transport bill and admission of receipt by the Manager pointed to unaccounted fuel used for production.

5. Remand Order Compliance Regarding Power Consumption Analysis:
The Tribunal had remanded the case to the Original Authority to specifically address the power consumption issue. However, the Original Authority failed to provide a detailed analysis and relied on the previously set aside Order-in-Original. The Commissioner (Appeal) noted this failure and found the demand unsustainable.

Conclusion:
The Tribunal found that the Original Authority did not comply with the remand order to reconsider the power consumption issue. The Commissioner (Appeal) had rightly observed that the Original Authority did not re-examine the power consumption factors as directed. The Tribunal agreed with the Commissioner (Appeal) that the case against the appellants was primarily based on power consumption variation, and since the Original Authority did not render a finding on this aspect, an adverse inference was drawn. The Tribunal also noted that similar demands were dropped against another entity under identical circumstances, reinforcing the decision to dismiss the appeals. Consequently, the appeals filed by the Revenue were dismissed.

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