2019 (9) TMI 745 - AT - Central Excise

Clandestine removal - Recovery of duty short paid - manufacture and clearance of MTs ingots - HELD THAT - It is not in dispute that the quantity of ingots manufactured and cleared without payment of duty has been determined solely on the basis of technical report/opinion of Dr.N.K.Batra - The said issue need not detain us any longer as the issue of demand of duty based on electric consumption, taking note of Dr.N.K. Batra s report, is no more res integra being considered and settled by Hon ble Jharkhand High Court in the case of Balashri Metals Pvt. Ltd 2016 (10) TMI 872 - JHARKHAND HIGH COURT and later followed in Om Shanti Steel Castings Pvt. Ltd. 2016 (12) TMI 93 - JHARKHAND HIGH COURT . In the said judgment it is observed that merely on the basis of Dr.N.K. Batra s report, demand of duty alleging clandestine manufacture and clearance cannot be sustained, as it is calculated taking only on the basis of consumption of electricity without examination of further corroborative evidences like procurement of raw material, movement of finished goods, etc. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Original No.04/CEX/2009 passed by the Commissioner of Central Excise & Customs, Nasik.
- Allegation of not recording correct production and clearance of finished goods based on electricity consumption.
- Demand of duty, interest, and penalty imposed.
- Imposition of personal penalty on the Director.
- Consideration of technical report by Dr. N.K. Batra.
- Ignoring circular advising examination of other parameters.
- Lack of corroborative evidence and necessary tests/experiments.
- Comparison with judgments from Hon'ble Jharkhand High Court and Tribunal.

Analysis:
1. The appeal was filed against Order-in-Original No.04/CEX/2009, where the Appellants were accused of not accurately recording production and clearance of finished goods based on electricity consumption. A show cause notice was issued for recovery of duty, interest, and penalty. The demand was confirmed, and a personal penalty was imposed on the Director. The Appellants challenged this decision.

2. The Appellants argued that the Department solely relied on Dr. N.K. Batra's technical report to calculate the alleged clandestine production of ingots. They contended that the Department overlooked a circular advising examination of other parameters and lacked corroborative evidence. The Appellants emphasized the need for necessary tests/experiments to support the allegations.

3. The Revenue supported the Commissioner's findings, while the Tribunal carefully reviewed the submissions and records. The central issue was whether the Appellants had indeed manufactured and cleared ingots without payment of duty. The Tribunal noted that the demand based on electricity consumption, as per Dr. N.K. Batra's report, lacked sufficient evidence beyond consumption data.

4. Referring to judgments from Hon'ble Jharkhand High Court and previous Tribunal decisions, the Tribunal concluded that demand based solely on electricity consumption, without further investigation or tests, was unsustainable in law. Citing precedents, the Tribunal set aside the impugned order, allowing the appeals against the demand of duty.

5. In the final decision, the Tribunal ruled in favor of the Appellants, emphasizing the importance of comprehensive evidence and tests to support duty demands based on technical reports. The judgment highlighted the necessity of corroborative evidence beyond consumption data to sustain allegations of clandestine production and clearance.