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TMI Blog2009 (3) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturing operation was actually carried out). 4. It has further been alleged in the impugned Notice that even though substantial power was consumed during the time period from 17:00 Hrs. to 23:00 Hrs. and 23:00 Hrs. to 06:00 Hrs., no production was shown either in Furnace Log Sheet (i.e. Hearwise Log Sheet showing production with details of raw materials used - FLS hereafter) or in RG-I resulting in suppression of huge production with the intent to evade payment of duty with detailed calculation as reflected in tables of the impugned Notice. 5. The Appellant states that consumption of electricity as reflected in Electricity Bills have no connection with the production of finished goods actually manufactured by the Appellant during the period when manufacturing activities were actually carried out i.e. from 06:00 Hrs. to 17:00 Hrs. The various factors which actually result into consumption of more electricity are as under : (i) The factory of the Appellant being located in a distant and backward rural area, the labour engaged in the factory for production of goods are not at all experienced which play a vital role in power consumption. Because of their inexperi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. (x) The Appellant disputed the Electric Consumption Bills raised by the State Electricity Board by letters dated 15-6-1999, 7-8-1999, 13-9-1999, 19-1-2001, 22-3-2001 and 14-4-2001 with specific declaration that production operation during the relevant months were suspended. Nothing to the contrary was heard from the State Electricity Board. (xi) The Appellant also contacted one Das Electric of Kolkata for study of electric consumption as indicated in the Electric Consumption Bills during the period from 1998-2001 which was thoroughly examined and expert opinion was furnished by the said Das Electric by their letter dated 2-6-2005. 6. The Notice was decided ex-parte by the Additional Commissioner of Central Excise, Siliguri Commissionerate (the Addl. Commissioner hereafter) vide Order-in-Original No. 11/Addl.Commr/CE/SLG/2004, dated 31-1-2005 by confirming the demand for Rs. 28,43,983.00 as raised by the impugned Notice along with interest chargeable thereon and imposing upon the Appellant a penalty of identical amount of Rs. 28,43,983.00. 7. Being aggrieved, the Appellant filed an appeal against the impugned Order-in-Original dated 31-1-2005 before the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for fresh decision after allowing the opportunity of hearing to the Appellant. 10. The Notice was decided afresh by the Addl. Commissioner vide Order-in-Original No. 03/Addl.Comm/CE/SLG/07, dated 28-3-2008 (the order hereafter) by confirming once again the demand for duty of Rs. 28,43,983.00 raised by the impugned Notice along with interest chargeable thereon and imposing upon the Appellant a penalty of identical amount of Rs. 28,43,983.00 inter alia holding and/or observing : (a) I find that the calculation for the alleged evasion of duty by way of suppressing production was based on the furnace Log Sheets according to which the average production per hour come to 0.600 MT (Approx.), the Generator input taken as 1300 KVA as taken by the authorized representative .... in his statement 13-2-03, the power factor and KWH taken from bills. I also find that the authorized representative of the said assessee in his statement confirmed the highest invoice price quoted by the said assessee during each year on the basis of which the assessable value has been arrived at. (b) The said assessee did not follow due procedure and statutory provisions regarding giving intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing The said assessee have also nowhere brought on record either before the jurisdictional Central Excise Authorities nor before the Adjudicating Authority that there was a dispute in the electricity bill received by them. No evidence of such dispute with the State Electricity Board and the so called opinion were produced during the entire period of the enquiry conducted by the departmental officers. The credibility of such a contention made after so many years is doubtful and therefore unreliable inasmuch as copies of all letters addressed to the State Electricity Board from time to time disputing the bills raised during the period as also expert opinion obtained from M/s. Das Electric were filed before the Additional Commissioner during the course of hearing of the Notice on being remanded by the Commissioner (Appeals) on 16-2-2008 when the Appellant filed written submission in defence along with copies of decisions of the Hon ble Supreme Court and the Hon ble Tribunal apart from copies of letters disputing electric consumption bills and expert opinion obtained from M/s. Das Electric. For that the Addl. Commissioner acted with total bias and arbitrariness in passing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored. Single parameter of production have not been taken at all main parameters viz. Generator input, power factor and KWH had been taken for consideration which are equal important and form tangible evidences. This has been corroborated by the consumption of raw materials used as depicted in Furnace Log Sheets and installed capacity of machinery existing at the relevant period in factory .... and the Furnace Log Sheet maintained by the factory inasmuch as it is an undisputed fact that the Furnace Log Sheets so much relied upon in passing the impugned order pertain only to working shift of the factory (i.e. 05:00 Hrs. to 17:00 Hrs.) and quantum of raw material relatable to such Furnace Log Sheets represent raw materials consumed only in the working shift for manufacture of Ingot manufactured by the Appellant. As regards quantification of raw materials for alleged clandestine manufacture of Ingots during the other 2 shifts was quantified (admittedly by applying the Furnace Log Sheet formula) without ascertaining and/or according to any evidence as to procurement of such quantified raw materials for alleged clandestine manufacture of Ingots and sale of such Ingots without payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be determined. The following decisions are cited in this regard to bring home the contention of the appellant that on the basis of consumption of electricity, no demand of duty can be raised. (a) 1996 (81) RLT 203 (Tri.) (b) 2003 (160) E.L.T. 213 (Tri.) (c) 1995 (76) E.L.T. 197 (Tri.) (d) 1994 (72) E.L.T. 777 (Tri.) (e) 2005 (190) E.L.T. 395 (Tri.) (f) 1998 (102) E.L.T. 139 (Tri.) (g) 1999 (35) RLT 92 (CEGAT) In the aforesaid verdicts of the Hon ble Tribunal, it has been held that on the basis of consumption of electricity alone, no production can be determined. It has been further held that on the basis of assumption and presumption, no demand of duty can be raised. Relying on the consumption of electricity determination of production of M.S. Ingots on that basis demand of duty is only on surmise and conjecture. Such determination of duty is not possible under the law. It has been held also in some cases that under Rule 173E of Central Excise Rules, 1944 normal production might be determined by taking into consideration other parameter such as installed capacity of raw-materials, utilization, labour employed, power consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmensurate with the production of M.S. Ingots inasmuch as to reach the melting point more consumption of electricity is necessary. Further, interruption of electricity which is a regular feature in North Bengal was also responsible for higher consumption of electricity. In case of interruption of electricity, the molten metal solidifies and those are required to be heated and melted again. All these factors are also responsible for more consumption of electricity. These things have not at all been considered by the ld. Commissioner. He has come to a facile conclusion that there was consumption of electricity so that the production should have been done according to the said norms. This is not maintainable under the law. In view of the discussions made hereinbefore, it is submitted that the order being based on surmise and conjecture in as much as it has been taken that so much electricity was only used in manufacture of goods in the factory of the appellant. There is also no basis of considering that the production was to be done on the basis of electricity per unit. There is also no determination on the part of the department to find out the number of units of electricity is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Input taken as 1300 KVA as stated by the authorized representative of the assessee in his statement 13-2-03. (c) Power Factor (P.F.) taken from bills. (d) KWH was from bills. Assessable value on the basis of the highest invoice price quoted by the said assessee during each year, and also confirmed by the authorized representative of the said assessee in his statement was taken as under :- Rs. 9,550/-per M.T. during 1998-99. Rs. 10,500/-per M.T. during 1999-00. Rs. 6,500/- per M. T. during 2000-01. Rs. 9,000/- per M. T. during 2001-02. 15. As is evident from the above, the calculations are all theoretical, and purely speculative. No doubt, the Department had very valuable data to work on i.e. substantial power consumption. But there is an underlying assumption that the entire power was utilized solely for clandestine production. However, the Appellant has cited the following reasons as factors that have not been taken into consideration : There are various reasons for consumption of electricity other than manufacture of M.S. Ingots in the factory of the appellant. They may be stated as under :- Consumption of electricity for various equipments installed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xc, Surat, normal production to be determined by taking into consideration several parameters such as (i) installed capacity, (ii) raw material utilization, (iii) labour employed, and (iv) power consumption, as prescribed in the Rule as well as other factors such as technology used, use of alternate raw material etc. - normal production fixed on basis of one factor alone namely power consumption is defective and not sustainable - demand based on such norms set aside. 21. In 2005 (190) E.L.T. 395 (Tri- Kolkata) - Commissioner of Central Excise, Bhubaneswar-I v. Minakshi Steels, Department failed to prove as to whether there was sufficient evidence to prove that power consumption per tonne was based on evidence or record seized from appellants or based on any experiment conducted in premises of assessee - No norm of consumption of power or any evidence in form of private records seized or any evidence which was based on any norm fixed by Department under Rule 173E of erstwhile Central Excise Rules, 1944 - Charge of clandestine removal based on assumption hence not sustainable. 22. In 1995 (76) E.L.T. 197 (Tribunal) - Madhu Foods Products v. Collector of Central Excise, Hyderabad, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vo decision. 24. It is well settled law that the charge of clandestine removal is required to be proved beyond doubt by the Revenue. In the case of Someshwara Cements Chem. Ltd. v. Commissioner of Central Excise, Hyderabad reported in 2005 (191) E.L.T. 1062 (Tri.- Bang.) it has been held that Clandestine removal - Proof- Register maintained by quality control manager - Entire case resting on it, but no corroborative evidence of raw material/electricity consumption/recovery of sale proceeds etc. for such huge production - HELD : Charge not proved - Rules 9, 57F(2) and 173Q of erstwhile Central Excise Rules, 1944 - Rules 4 and 25 of Central Excise Rules, 2002. Clandestine removal - Proof Benefit of doubt is to be given to assessee when investigation by Revenue is not very thorough - Rules 9, 57F(2) and 173Q of erstwhile Central Excise Rules, 1944 - Rules 4 and 25 of Central Excise Rules, 2002. 25. The consumption of electricity appears suspicious but in the absence of any other supportive evidences, the charge of clandestine removal cannot be accepted. As such extending the benefit of doubt to the Appellant, I set aside the impugned order and allow the Appeal with consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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