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2021 (11) TMI 895 - AT - Central ExciseClandestine removal - CTD bars and rods - shortage of inputs - department has been able to sufficiently establish the basis of the duty demand or not - penalty - HELD THAT - When the Tribunal had not made any observations with regard to the shortage of raw materials and had clearly remanded to look into the transactions between the traders and M/s. MMSD and the method adopted by the appellant to clandestinely clear the finished products through M/s. MMSD, the quantification of shortage of raw materials on the basis of EXIM Policy, was totally unwarranted and purposeless. The input output ratio given in the EXIM Policy (Sl. No. C513) has been adopted to calculate the input output ratio of manufacture of CTD bars. The appellant herein has neither imported raw materials nor do they export their finished products. This ratio has not been made the basis for quantification of duty in the Show Cause Notice. Though the remand was to look into the demand of ₹ 12,90,032/-, the duty confirmed in the impugned order is ₹ 21,15,379/-. This is because the Commissioner has added ₹ 11,48,044/- which has been already upheld by the Tribunal to the amount of ₹ 9,67,335/- arrived by him. I cannot understand the logic of the adjudicating authority in adding the amount that has already been upheld by the Tribunal. Though the Tribunal has remanded the matter to look into the penalty that has to be imposed after readjudication of the issue of ₹ 12,90,032/- that has been remanded, the issue of penalty in regard to ₹ 11,48,044/- has to be recorded separately. The duty demand that has been already upheld by the Tribunal cannot be added to the amount of adjudication in denovo adjudication. The adjudicating authority has confirmed the total demand of ₹ 21,15,379/-. There is no demand of ₹ 21,15,379/- at the time of adjudication. The demand adjudicated is only ₹ 12,90,032/-. There cannot be confirmation of a higher amount. The Commissioner having analysed merely the shortage of raw materials, the argument of the learned counsel that they requested for cross-examination of mahazar witnesses and the adjudicating authority did not allow the same acquires relevance - though in the Show Cause Notice it is alleged that 615.28 MTs of CTD bars were clandestinely removed through M/s. MMSD and duty demand of ₹ 12,90,032/- was raised, in the present order, the adjudicating authority has held that the CTD bars unaccounted would be 461.37 MTs only. Then it has to be explained through which of the traders, the same were shown to be purchased. The allegation on this issue is that the clearance was camouflaged through fake invoices of many traders. The evidences in this line are not discussed. Department has not been able to establish with preponderance of probability the duty demand in respect of 615.28 MTs of CTD bars received by M/s. MMSD as alleged in the Show Cause Notice - the demand confirmed in regard to the CTD bars received by M/s. MMSD requires to be set aside - Since the remand was for reconsidering the penalty, the duty demand upheld by the Tribunal with respect to ₹ 11,48,044/- having attained finality, the equal penalty confirmed in the earlier adjudication order would sustain. Appeal allowed in part.
Issues Involved:
1. Duty demand of ?31,96,509/- on 1219.89 MTs of CTD bars received by M/s. NHS. 2. Duty demand of ?12,90,032/- on 615.28 MTs of CTD bars received by M/s. MMSD. 3. Duty demand of ?11,48,044/- on 445.17 MTs of CTD bars received by M/s. Anand Steel Mart. Issue-Wise Detailed Analysis: 1. Duty Demand of ?31,96,509/- on 1219.89 MTs of CTD Bars Received by M/s. NHS: The Tribunal set aside the demand of ?31,96,509/- in respect of 129.89 MTs of CTD bars alleged to be received by M/s. NHS. This decision was based on the evidence and the notebook recovered from NHS, which the Tribunal found insufficient to sustain the duty demand. 2. Duty Demand of ?12,90,032/- on 615.28 MTs of CTD Bars Received by M/s. MMSD: The Tribunal remanded this issue for denovo consideration. The Commissioner of Central Excise, Madurai, in the denovo adjudication, confirmed a reduced duty demand of ?9,67,335/-. The Commissioner calculated this amount based on the shortage of inputs recorded during the search and applied the input-output ratio as per SION norms from the EXIM Policy. However, the Tribunal found this approach unwarranted and beyond the scope of the Show Cause Notice, which did not base its quantification on EXIM Policy ratios. The Tribunal also noted that the Commissioner failed to analyze the transactions between M/s. MMSD and the alleged traders, and the evidence of transportation was not established. Additionally, the Tribunal emphasized that the statement of Shri R. Manoharan, which was retracted and not examined under Section 9D of the Central Excise Act, could not be relied upon. Consequently, the Tribunal set aside the demand of ?9,67,335/- and the penalty imposed on M/s. MMSD. 3. Duty Demand of ?11,48,044/- on 445.17 MTs of CTD Bars Received by M/s. Anand Steel Mart: The Tribunal upheld the duty demand of ?11,48,044/- in respect of 445.17 MTs of CTD bars received by M/s. Anand Steel Mart. This decision was based on the evidence provided, including chits recovered from the residence of Shri M.C. Nagarathinam. The Tribunal also upheld the equal amount of penalty under Section 11AC of the Central Excise Act, 1944, read with erstwhile Rule 173Q of Central Excise Rules, 1944, and Rule 25 of Central Excise Rules, 2001/2002. Penalty Considerations: The Tribunal noted that the penalty imposed by the adjudicating authority needed to be revised in light of the modifications ordered in respect of various demands. The penalty on M/s. NHS was set aside, and the penalty on Shri Ramaswamy, MD of M/s. DSRM, was reduced from ?2 lakhs to ?30,000/-. The Tribunal also emphasized that the penalty related to the duty demand of ?11,48,044/- should be recorded separately and not added to the amount adjudicated in the denovo proceedings. Final Order: 1. The duty demand of ?11,48,044/- along with applicable interest and equal amount of penalty under Section 11AC of the Central Excise Act, 1944, read with erstwhile Rule 173Q of Central Excise Rules, 1944, and Rule 25 of Central Excise Rules, 2001/2002, is upheld. 2. The demand of ?9,67,335/- is set aside. Consequently, the penalty of ?1 lakh imposed on M/s. MMSD under Rule 26 of Central Excise Rules, 2001/2002, is also set aside. 3. Appeal No. E/40679/2020 is partly allowed in the above terms. Appeal No. E/40680/2020 is allowed with consequential reliefs, if any. Pronounced in open court on 25.11.2021.
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