2024 (6) TMI 123 - AT - Central Excise

Clandestine manufacture and removal - demand confirmed solely on the basis of the expert opinion (of Mr. G.S. Hegde), Chartered Engineer on consumption of electricity in production of unit quantity of MS ingots and CTD bars - HELD THAT - Undisputedly, the appellant are engaged in the manufacture of MS ingots which are captively consumed in the manufacture of CTD bars. Periodical show-cause notices were issued to the appellant on the basis of expert opinion of Mr. G.S. Hegde, Chartered Engineer who opined that 1000 units of power is required to manufacture 1 MT of MS ingots and 200 units of power is required to manufacture 1 MT of CTD bars. On the basis of said unit consumption of electricity, estimated quantity of ingots and CTD bars manufactured during the period has been calculated and on comparison of the said figures with the Statutory Registers maintained for production and clearance, the difference quantity alleged to be removed clandestinely without payment of duty. In the appellant s own case for earlier period i.e. from August 2001 to June 2007, this Tribunal has already decided the issue in SARAVANA ALLOYS STEELS PVT. LTD. VERSUS COMMR. OF C. EX., BANGALORE-II 2011 (2) TMI 1211 - CESTAT, BANGALORE . After analysing the principles of law on the issue, this Tribunal has observed ' No evidence is available for transport of such goods cleared without payment of duty. There is no evidence of receipt of sale proceeds of any quantity of its final products without accountal. These would indicate that the basis for finding of evasion viz., the power consumption ascertained by Shri G.S. Hegde is totally incorrect.' Following the aforesaid judgment of the Tribunal in the appellant s own case and while for subsequent period, the Revenue could not place any further corroborative evidence, except quantifying and confirming the demand based on expert report of Mr. G.S. Hegde, Chartered Engineer, same cannot be sustained. The impugned order is set aside - Appeal allowed.

Summary

Issues involved: Appeal against Order-in-Original alleging clandestine manufacture and clearance based on electricity consumption.

Summary:
The appellant, engaged in manufacturing non-alloy steel products, was issued show-cause notices for alleged clandestine manufacture and clearance based on electricity consumption. The appellant contested the demand of duty solely relying on expert opinion of Mr. G.S. Hegde, Chartered Engineer. The Tribunal, considering previous judgments and lack of corroborative evidence, set aside the demand. The Tribunal emphasized the onus on the department to prove clandestine activities and highlighted the need for concrete evidence. The Tribunal referred to similar cases and established that demands based solely on electricity consumption are not sustainable without further evidence. The Tribunal upheld the principle that adverse conclusions cannot be based on presumption alone. The Tribunal concluded that the demand lacked a reliable basis and set it aside, allowing the appeal with consequential relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand of duty alleging clandestine manufacture and clearance solely based on expert opinion of electricity consumption, emphasizing the need for concrete evidence to support such claims.