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TMI Blog2006 (8) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... ler, P.S. Ramesh, Sales Consultant of the applicant firm, have also filed the applications as Co-applicants against the said Show Cause Notice. In the Show Cause Notice, differential duty of Rs. 10,18,78,480/- was demanded, apart from proposal for interest and penalties, while the applicant has admitted an additional amount of Rs. 3,21,32,236/-. 2. The facts of the case briefly as follows : The applicants are manufacturers of MS Billets and Bars Rods, falling under Chapter Sub-headings 7206.90 and 7214.90. The officers of the Central Excise, Trichy, searched various premises and conducted certain investigations against them and, on the basis of the said investigation, it was found that they had not accounted large quantities of billets manufactured and captively consumed. Similarly, they purchased billets from outside and used such billets without accounting them in their books. There was a shortage of 1730 MTs of billets from the accounted for quantity on the day of the search. Large quantities of bars and rods manufactured were not accounted for (and what was recorded in the daily stock record was less than the actual production). The investigation resulted in obtaining a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability based on the actual shortage of raw materials. 5. The revenue representative strongly submitted that the department had conducted extensive investigations and relied on number of documents to prove the allegations while arriving at the duty demand. 6. In view of the above, the Bench directed the Commissioner (Investigations), to investigate the points raised by the applicant, vis-a-vis, the stand of the department in respect of the above demand, which would, inter alia, include verification of : (i) the correctness of the admitted duty liability with reference to the documents relied upon by the applicant, (ii) the process of manufacture and consumption account of the raw materials and production of finished goods, i.e., MS Billets and bars and rods thereof, during the disputed period, (iii) the stock account of raw materials and finished goods manufactured by the applicant, (iv) the purchase account of raw materials and to see whether the applicant has purchased enough quantities of raw materials required for the manufacture of the alleged quality of finished goods (v) the claim of the applicant that the evidences relied in the Show Cause N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess quantity was added to the accounted production, then the alleged quantity manufactured would be beyond their normal production capacity. The applicant have admitted the duty liability for the said two years based on the shortages of raw materials noticed. 9.2 The Advocate furnished written submissions, wherein he submitted that the applicant were eligible for deduction as per Section 4 of the Central Excise Act, 1944, by treating the sale-price as cum-duty-price, in view of the Apex Court decision in Maruti Udyog case, which has been followed by this Bench of the Settlement Commission in the case of Rangaraja Steels, Karaikkal. He also prayed for immunity from payment of interest, imposition of penalty and prosecution and pleaded that the applicant was a sick company under the purview of BIFR and they had accumulated a loss of Rs. 7 crores as on 31-3-2006. He relied on certain earlier decisions of this Bench seeking complete waiver of interest, penalty and prosecution. 10. Shri Thamizhvalavan, revenue representative, contended that statements were recorded from key persons of the applicant company, wherein they have admitted clandestine removals and a plethora of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments are not available for the entire period, to support computer sheet No. 59. For the month of April, 2003, the demand has been made on the basis of certain private documents recovered from dealers also. The department has placed reliance on statements of S/Shri BKS Sastri, S. Balasubramaniam and K. Ramanathan etc. For the purpose of billets, after closure of the Steel Melting Shop by the end of June, 2002, the Revenue relies on the documents showing unaccounted purchase of billets from M/s. Sumangala Steel, Pondicherry, as detailed in Annexure-D of the Show Cause Notice, to prove unaccounted production of bars and rods. The total demand made on account of unaccounted removals of bars, rods and by-products, for the year 2002-03, in the Show Cause Notice is Rs. 1,03,10,665/-. 13. The applicant s contention is that the documents relied upon in the Show Cause Notice were maintained for ISO surveillance audit purposes. One of the objectives of the ISO is continual improvement in all spheres, which should result in improvement of production quality and sales performance. The applicant have also contended that in the ISO files, submitted to the investigation team, there were circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her duty amount of Rs. 2,86,89,436/- for the said period. From the Show Cause Notice, it is noticed that for the year 2001-2002, on the basis of computer sheets, the Revenue demanded Rs. 4,36,16,861/- of unaccounted clearances of bars and rods. Apart from the computer statements, it is noticed that number of other documents have been cited in the Show Cause Notice, which show unaccounted clearances during certain months of 2001-2002. In para 3.29 of the Show Cause Notice, a document has been cited which shows that during the months of May, and June, 2001, the production of rolling mill was not completely accounted. For these two months, 1775 MTs of bars and rods were not accounted in the statutory records. Similarly, for March, 2002 also such unaccounted production has been established. This is further corroborrated by statements of certain dealers of bars and rods. Therefore, it is clear that in 2001-2002 also, there has been wide spread clandestine clearances of bars and rods. According to the computer statements, there were unaccounted clearances of 17363.400 MTs . This more or less agrees with the estimated production on the basis of furnace oil consumption indicated in the Sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded duty only on the ex-duty value. Apparently, for the other demands also, the same method has been adopted. In view of this it is clear that the benefit of cum-duty value has already been extended to the applicant and no further benefit can accrue to them at this point of time. 21. Applicant, as well as co-applicants, pleaded for immunities from penalty and prosecution, which is merited in view of the cooperation extended by the applicant and the various financial constraints, which the applicant is facing in running the unit at the present time. As regards immunity from interest, the Bench has noted that the applicant has paid an amount of Rupees One crore at the time of investigation, before issue of the Show Cause Notice for the balance amount to be payable, the Bench is of the opinion that interest is leviable. 22. Accordingly, taking into account the above fact, the applications are settled in terms of Section 32F(7) of Central Excise Act, 1944, on the following terms and conditions : (i) The total duty liability is settled at Rs. 6,27,88,473/-. They have already paid an amount of Rs. 3,21,32,236/-. The balance amount shall be paid within 30 days from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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