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TMI Blog2012 (11) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... tification above mentioned by way of bogus/excess account of fly ash resulting in evasion/non-payment of Central Excise duty. The period of dispute is 2003-04 and 2004-05. 2. The case of the Department is that the benefit of the Notification had been availed wrongly by accounting bogus/excess fly ash receipts. 3. The first applicant receives fly ash lifted by the second applicant and receives fly ash from other suppliers who in turn procure the same from the open market, as well as fly ash procured by the second applicant from the open market. During the period 2003-04 the applicants procured a total quantity of 19125.720 tons of fly ash out of which 7285.060 tons were procured on the basis of allotment to them, 2251 tons were procured from the second applicant and 9589.539 tons from various other third party vendors who in turn procured them from open market. In 2004-05, as against total procurement of 19815.850 tons, 3829.650 tons were procured on the basis of allotment to them, 7957.690 tons were procured from the second applicant and 8028.510 tons from various other third party vendors service similarly placed. The short-receipt of fly ash from sources other than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same in their books of account. There is no finding that the first applicant had purchased fly ash which is prima facie essential ingredient for the manufacture of cement, from some other source, no dispute regarding the quantity of cement manufactured by the second applicant and therefore prima facie cement was manufactured by the first applicant using fly ash, including fly ash supplied by the second applicant, and procured by it from the open market. There is no dispute regarding receipt of fly ash from other suppliers who procured the same from the open market. The first applicant has therefore prima facie established the use of fly ash of the percentage prescribed under the Notification and is therefore prima facie entitled to the benefit of Notification No. 6/2002-C.E. The second applicant therefore, prima facie, cannot be held to have abetted the first applicant in misuse of the exemption under the Notification. 6. For manufacture of asbestos cement sheets, major raw materials required are (i) cement (ii) asbestos fibre (3) fly ash/gypsum (4) cotton/wood pulp etc. - the ratio of raw materials is generally 83.3 Kgs. asbestos fibre, 416.7 Kgs. of cement, 285.6 Kgs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusions drawn above in the proposed order at the stage of consideration of the stay applications filed by both the appellants. 10. The Hon'ble Supreme Court and the Hon'ble Bombay High Court have held that prima facie case alone is not sufficient to grant interim stay vide the decisions in the following cases :- (a) Benara Valves Ltd. v. C.C.E. - 2006 (204) E.L.T. 513 (S.C.) = 2008 (12) S.T.R. 104 (S.C.). (b) Ravi Gupta v. Commissioner of Sales Tax - 2009 (237) E.L.T. 3 (S.C.) = 2010 (20) S.T.R. 264 (S.C.). (c) Wardha Coal Transport Pvt. Ltd. v. Union of India - 2009- TIOL-79-HC-MUM. = 2009 (13) S.T.R. 490 (Bom.). In view of the aforecited decisions, even if a prima facie case appears to exist, no blanket stay order can be granted without pleading and demonstrating financial hardship. I find that both the appellants have merely stated in identical terms in the stay petitions that they would be exposed to undue financial and other hardship as their liquidity position is hopelessly bad for the present. But no supporting documents or arguments have been provided on behalf of the appellants in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of the impugned goods in respect of which the first appellant is claiming exemption from payment of duty at the normal rates. 15. The Govt. has a well formulated policy regarding disposal of environmentally hazardous fly ash for the control and disposal of the same and simultaneously a very liberal exemption from Central Excise duty has been put in place to encourage genuine use of such hazardous fly ash so that the same is used up without endangering the environment. If the exemption has to be granted far in excess of licitly obtained fly ash against allotments made in the name of the first appellant and similarly placed other manufacturers, not only huge amounts of public revenue will be lost, the broader policy of the Govt. to contain environmental pollution will also be in jeopardy. Therefore, the claim of the appellants that they have obtained such a huge quantity of fly ash in the black market has to be viewed accordingly before granting exemption to them from payment of excise duty amounting to over Rs. 13.23 crores. 16. The case law cited by the appellants to the effect that violation under one enactment cannot be penalized under another is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they cannot be given a blanket waiver from the requirement of pre-deposit under Section 35F of the Central Excise Act. 20. After taking into account the unsubstantiated submission regarding financial hardship and after taking into account that the appellants could have at the most manufactured the impugned goods only to the extent of four times the quantity of fly ash, legally obtained by them against quota/allotment made in their name satisfying the condition of 25% fly ash content, and taking into account other attendant facts and circumstances of the case and the law laid down in the aforecited decisions of the Hon'ble Supreme Court and the Hon'ble Bombay High Court [vide citations in para 9], I direct the first appellant M/s. Visaka Industries Ltd. to pre-deposit an amount of Rs. 4,50,00,000/- (Rupees four crores and fifty lakhs only) towards duty and the second appellant M/s. Natesan Engineers & Contractors to pre-deposit an amount of Rs. 4,00,000/- (Rupees four lakhs only) towards penalty within six weeks from the date of pronouncement of the stay order. Subject to compliance with the above direction, pre-deposit of the balance amount of duty, interest and penalty sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 6/2002-C.E., dated 1-3-2002 Sl. No. 158 exempts goods falling under Chapter No. 68 "in which not less than 25% by weight of fly ash or phospho-gypsum or both have been used" subject to fulfilment of condition No. 36 which reads as under :- "36. If the manufacturer maintains proper account in such form and in such manner as the Commissioner of Central Excise having jurisdiction may specify in this behalf, for receipt and use of fly ash or phosphor-gypsum or both, in the manufacture of all goods falling under Chapter 68 of the First Schedule and files a monthly return in the form and manner, as may be specified by such Commissioner of Central Excise, with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction." (b) The assessee availed the exemption claiming that they have used more than 25% by weight of fly ash. (c) According to the investigation by the department, a quantity of 2251 MTs out of 19125.720 MTs of fly ash for the year 2003-04 and a quantity of 7957.690 out of a quantity of 19,815.850 for the year 2004-05 was not received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, generally 416.7 kgs of cement, 83.3 kgs. of asbestos fibre, 285.6 kgs of fly ash, 8 kgs. of cotton pulp are required besides other inputs including water. (b) The assessee is procuring fly ash from 3 distinct sources, namely (i) from MTPS, on the basis of allotment given to them (ii) from M/s. Natesan Engineers & Contractors/Natesan Construction Product and (iii) from other sources including ETPS, Vizag Thermal Power Station (VTPS). (c) The department has doubted the receipt of 2251.121 MTs of fly ash out of a total quantity of 19,125.740 for the year April 2003 to March 2004. (They are not disputing the receipt of 7285.060 MTs which have been received on the basis of allotment given to them and also quantity of 9589.539 MTs received from other sources). Similarly, for the year 2004-05, the department has doubted the receipt of 7957.690 MTs of fly ash against a total quantity of 19,815.850 MTs. (according to ld. special counsel for the department, the total quantity is 20,524.014 MTs). Excluding such quantity, the Commissioner has come to the conclusion that the assessee has utilized quantity of fly ash below 25% by weight and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (j) In respect of some consignments of fly ash received by the assessee, the department has alleged that vehicle numbers mentioned in the documents did not refer to lorries but other vehicles like cars which cannot carry such quantity. This discrepancy relates to some consignments of fly ash totally weighing 954.63 MTs only received during the months of July, August, October, November and December 2004 and even if the quantities mentioned in those documents are excluded, then also they have fulfilled the threshold limit of 25% of utilization of fly ash. (k) The consignments of fly ash have been received not only from Natesan Engineers and Contractors and Natesan Construction Product but also from other parties like Gum Traders. In all cases, the service charges, freight etc. stands paid either by cheque or by cash and duly accounted by the assessee. 25.2 He relies on the following decisions in support of his various submissions :- (1) Becker Gray and Co. (1930) Ltd. and Ors. v. UOI and Anr. - (1970) 1 SCC 352 (2) Greaves Cotton and Co. Ltd. v. Sales Tax Officer and Anr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative evidence like invalid vehicle numbers and endorsement "need not pay" in the receipt registers of the assessee for certain quantities. (e) The dispatch advices issued by Shri Santhosh Kumar in the names of his firms mentioned the name of the consignor as MTPS only for the entire supplies though MTPS authorities have confirmed only supply of lesser quantity. (f) The assessee was entitled to receive 2000 MTs per month but they have chosen to lift much lesser quantity. In fact, they have made advance payment for lifting 9000 MTs for the period 2003-04 but they have lifted only a lesser quantity and accordingly claimed refund relating to a quantity of 2165 MTs. While not lifting such quantity, they have chosen to record, in connivance with Shri Santhosh Kumar, alleged receipt of additional quantity of fly ash with a view to show as if they have reached the threshold limit of 25% by weight and availed the benefit of Exemption Notification. (g) As Shri Santhosh Kumar has not been able to produce any evidence of procurement from third parties (who are also alleged to have been allotted by MTPS only), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in respect of 7957.690 MTs of fly ash accounted for the year 2004-05 in excess of what has been received from MTPS. Though, Shri Santhosh Kumar assured to reveal the names and addresses of persons from whom fly ash was procured from "open market", he failed to do so. In the absence of evidence from procurement of fly ash by the firms of Shri Santhosh Kumar, prima facie, their claim that they supplied such quantity to the assessee cannot be accepted. The assessee and the firms of Shri Santhosh Kumar have special relationship and their failure to produce the evidence regarding their procurement puts the question mark on the receipt of quantities in excess of what was actually received by assessee on the basis of allotment by MTPS. 28.4 It is not as if asbestos cement cannot be manufactured without using fly ash. It appears to be a conscious decision to encourage desirable methods of disposal of "hazardous waste" with a view to safeguard against the environment pollution and consequently the notification granting exemption for goods falling under Chapter 68 has been provided subject to a minimum use of 25% by weight of fly ash or phosphor-gypsum. 28.5 Since the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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