1999 (7) TMI 216 - AT - Central Excise

Summary

Issues Involved:
1. Compliance with Tribunal's Directions for De Novo Adjudication
2. Basis for Duty Demand and Allegation of Clandestine Production
3. Onus of Proof and Evidence of Clandestine Removal
4. Extended Period of Limitation
5. Penalty Imposition

Summary:

1. Compliance with Tribunal's Directions for De Novo Adjudication:
The Tribunal had directed the Commissioner to conduct a de novo adjudication on the charge of clandestine production and removal of iron and steel products by the appellants. The Tribunal emphasized the necessity of establishing evidence of clandestine manufacture and surreptitious removal, including a test run to correlate electricity consumption with production. The Commissioner was also directed to correlate private records with independent evidence such as octroi records and electricity department records.

2. Basis for Duty Demand and Allegation of Clandestine Production:
The appellants argued that the duty demand was based on purported units of electricity consumed, disregarding actual electricity bills and consumption. They contended that the Commissioner failed to follow Rule 173E objectively and scientifically. The appellants also highlighted that the actual production, including defective ingots and waste, was ignored in the demand calculation. The Commissioner, however, conducted test runs and studies in other units, concluding that the norm of 705 KWH was appropriate. The Commissioner also relied on private records and slip pads maintained by the appellants' employees, which were admitted during cross-examination.

3. Onus of Proof and Evidence of Clandestine Removal:
The appellants argued that the onus of proving clandestine removal was on the Revenue, which was not discharged due to the absence of evidence showing the manner of removal. They contended that the SCN did not allege additional inputs received or unaccounted production. The Commissioner, however, correlated private records with log sheets and RG 1 Register, concluding that there was substantial under-recording of production. The Commissioner also noted that the presumption of truth of documents u/s 36A applied to adjudication proceedings.

4. Extended Period of Limitation:
The appellants argued that the extended period of limitation was unsustainable since the jurisdictional Excise Officers had verified and certified their records periodically. They contended that there was no basis for alleging mis-statement, suppression, or concealment of facts. The Commissioner, however, relied on octroi receipts and weighment slips, which were not rebutted by the appellants, to support the allegation of unaccounted production.

5. Penalty Imposition:
The appellants argued that the penalty imposed was untenable as the grounds of the SCN and the impugned order were liable to be set aside. The Commissioner, however, justified the penalty based on the findings of clandestine production and removal.

Conclusion:
The Tribunal found that the Commissioner had complied with the direction for conducting a test run but noted a significant gap between the norm adopted and the actual consumption figures. The Tribunal observed that the other directions, such as evidence of clandestine removal and correlation between private records and octroi receipts, were not clearly established. Consequently, the Tribunal held that the Department's case remained unsubstantiated, allowing the appeal and setting aside the impugned order.