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2024 (8) TMI 148 - AT - Central ExciseClandestine removal - demand on the basis of electricity consumption - demand for M.S. Ingots which has been calculated on the basis of ledger pages - demand on the basis of ledger pages not recovered from residence of Directors - demand on basis of ledger pages and documents recovered from the residence - demand in respect of risers and runners alleged to have been manufactured but not accounted for based on the electricity consumption of the unit - inadmissible Cenvat credit on receipt of scrap. Demand on the basis of electricity consumption - contention of the Appellant is that consumption of electricity varies between 900 to 1000 units per Ton - HELD THAT - There is no corroborative evidence of procurement of any unaccounted raw material, transportation and/or seizure of any unaccounted raw material in the unit of the Appellant or during its transportation, payment trail for unaccounted raw material. No suppliers of unaccounted raw material have been identified. There was no discrepancy in stock of finished goods at the time of visit of the Officers. No finished goods were seized during their unaccounted removal. No purchasers of allegedly clandestinely cleared finished goods have been identified. No unaccounted cash has been recovered from the premises of the two units of the Appellant or from residence of Directors. Thus, allegation of clandestine removal is only on the basis of electricity consumption. In the case of COMMISSIONER OF C. EX., MEERUT-I VERSUS RA CASTINGS PVT. LTD. 2010 (9) TMI 669 - ALLAHABAD HIGH COURT , Hon ble Allahabad High Court, while upholding the order of the Tribunal RA CASTINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-I 2008 (6) TMI 197 - CESTAT NEW DELHI held that mere electricity consumption cannot be the sole basis for determining duty liability. The demand raised on the basis of electricity consumption is not sustainable and is set aside. Equivalent penalty on this ground is also set aside. Demand raised on the basis of ledger pages as per table 7(A) of SCN which has been compiled on the basis of RUD 9 - HELD THAT - The documents have been recovered from the briefcase of Shri Nitin Agarwal. It is found that in his statement, Shri Nitin Agarwal, Director has accepted these transactions. He has not retracted from his statement at any time. Further, his statement is corroborated by the said documents and vice-versa. The demand of Central Excise duty of Rs.18,32,131/- and education cess of Rs.36,643/- and imposition of equivalent penalty of Rs.18,68,774/- confirmed. Demand on the basis of RUD-12 recovered from the briefcase of Shri Nitin Agarwal and on the basis of documents recovered from the residence of the Directors - HELD THAT - These documents have also been accepted by Shri Nitin Agarwal in his statement. The demand of Rs.5,38,732/- and education cess of Rs.10,775/- along with imposition of equivalent penalty confirmed. Demand in respect of clandestine removal of risers and runners which are alleged to have been clandestinely manufactured and removed but not accounted for - HELD THAT - The three financial years for which demand has been raised are 2004-05, 2005-06 and 2006-07. The demand of risers and runners has also been raised on the basis of electricity consumption per unit. This issue has already been discussed in detail in preceding paras. Accordingly, the demand of Central Excise duty of Rs.4,13,177/- and education cess of Rs.8,264/- in respect of risers and runners set aside. Equivalent penalty of Rs.4,21,441/- is also set aside. Demand on the basis of shortage in quantity of raw material noticed at the time of search - HELD THAT - There is no record in panchnama of any weighment having been done. The SCN is silent on the mechanism adopted by the Officers who carried out the search to arrive at the shortage. The counsel for the Appellant also contended that the Officers have shown shortage only to book a case against the Appellant and the fact that there is no shortage in stock of any other raw material or in the stock of finished goods established the bona fides of the Appellant - the demand on alleged shortage and the equivalent penalty imposed for the alleged shortages set aside. Demand in respect of inadmissible Cenvat credit on receipt of scrap for the years 2004-05 and 2005-06 - HELD THAT - The demand has been raised on the allegation that waste scrap shown to have been received by the Appellant from its sister concern Kunj Forgings Pvt. Ltd. were actually not received but were paper transactions only. Appeal disposed off.
Issues Involved:
1. Demand based on electricity consumption. 2. Demand based on ledger pages. 3. Demand for clandestine removal of risers and runners. 4. Demand based on shortage of raw material. 5. Inadmissible Cenvat credit on receipt of scrap. 6. Penalty on the Director. Issue-wise Detailed Analysis: 1. Demand Based on Electricity Consumption: The major portion of the demand (C.Ex. duty Rs.1,83,40,802/- including education cess) was calculated based on the electricity consumption, presuming that only 668.568 units of electricity are needed to manufacture 1 M.T. of ingots. The Tribunal found that there was no corroborative evidence of unaccounted raw material procurement, transportation, or removal of finished goods. The Tribunal referenced the case of Commissioner of C.Ex., Meerut-I Vs. R.A. Castings Pvt. Ltd., where it was held that mere electricity consumption cannot be the sole basis for determining duty liability. Consequently, the demand raised on the basis of electricity consumption was set aside, along with the equivalent penalty. 2. Demand Based on Ledger Pages: The demand of Rs.18,32,131/- towards Central Excise duty and Rs.36,643/- towards education cess was based on ledger pages recovered from the briefcase of Shri Nitin Agarwal, which he accepted in his statement. The Tribunal confirmed this demand and the equivalent penalty of Rs.18,68,774/-. Additionally, the demand of Rs.5,38,732/- and education cess of Rs.10,775/- was confirmed based on documents recovered from the residence of the Directors, which were also accepted by Shri Nitin Agarwal. 3. Demand for Clandestine Removal of Risers and Runners: The demand for risers and runners was based on electricity consumption per unit. Since the Tribunal had already set aside the demand based on electricity consumption, the demand of Central Excise duty of Rs.4,13,177/- and education cess of Rs.8,264/- in respect of risers and runners was also set aside, along with the equivalent penalty. 4. Demand Based on Shortage of Raw Material: The demand was based on a shortage of raw material noticed during the search, which was admitted by Shri Nitin Agarwal. However, the Appellants contended that the shortage was based on eye estimation without actual weighment. The Tribunal found force in the Appellant's arguments and set aside the demand and the equivalent penalty imposed for the alleged shortages. 5. Inadmissible Cenvat Credit on Receipt of Scrap: The demand of Cenvat credit of Rs.62,21,374/- and education cess of Rs.1,24,427/- was based on the allegation that scrap shown to have been received from KFPL were paper transactions. The Tribunal referenced a previous order where it was held that KFPL had cleared scrap, thus establishing that the Appellant legitimately availed Cenvat credit. Consequently, the demand and equivalent penalty were set aside. 6. Penalty on the Director: A penalty of Rs.30,00,000/- was imposed on Shri Nitin Agarwal, Director. Since part of the demand was set aside, the Tribunal reduced the penalty on Shri Nitin Agarwal to Rs.1 lakh only. Conclusion: The Tribunal set aside the major demands based on electricity consumption and shortage of raw material, confirming only the demands based on ledger pages. The penalties were adjusted accordingly, providing a detailed and reasoned judgment addressing each issue comprehensively. The appeals were disposed of in these terms.
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