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TMI Blog2014 (3) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the manufacture of MS ingots and TMT bars falling under Chapter 72 of the schedule to the Central Excise Tariff Act and availing the benefit of Cenvat credit of duty paid on inputs, capital goods and various services availed by them. 2. On the basis of certain investigations conducted by the Revenue and on scrutiny of raw material consumed by the appellant in the induction furnace division, Revenue entertained a view that they had recorded abnormal consumption of pig iron, scrap, CPC production apart from low production yield resulting in high utilization of Cenvat credit. As such, it was held that appellant have taken Cenvat credit of excess quantity on pig iron, scrap, CPC production without actual use of the same in the manufacture of their final product. Accordingly, proceedings were initiated against them resulting in confirmation of demand of duty of Rs.5,69,46,336/-, along with confirmation of interest and imposition of penalty. The impugned order of Commissioner is appealed against by way of filing of an appeal along with stay petition. 3. Arguing on the stay petition, learned advocate Shri Alok Barthwal appearing for the appellant, drew our attention to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the Aditi Ispat vs CCE Raipur [Stay Order No. SO/58372/2013 Ex(DB) dated 9.7.2013] wherein an identical issue of excess used of Pig Iron in the manufacture of final product based upon the report of NIT Raipur was considered and after taking note of the entire facts and circumstances, the appellant was directed to deposit an amount of Rs.25 lakhs out of total duty of Rs.5.53 crores. We are mindful of the fact that appellants in other similar situations should be given the same treatment at the interim stage and the earlier precedent orders should not be deviated from. 6. As such, we direct the applicant to deposit an amount of Rs.30,00,000/- (Rupees Thirty lakhs only) in the present case as a condition of hearing of their appeals within about 8 weeks from today and report compliance on.................. Subject to the deposit of above amount, the pre-deposit of balance amount of duty and entire amount of penalty is waived and its recovery stayed during the pendency of the appeals. 7. Stay petitions are disposed of in the above terms. (Pronounced in the open court on) Per: Manmohan Singh: 8. I observe that in the draft order recorded by the learned Member ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 539 MT as shown by them in 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 (upto December 2010 respectively. Similarly they require CPC qty 149 MT and 155 MT only against the recorded usage of 194 MT and 333 MT as recorded by them in 2006-07 and 2007-08 respectively, apart from the usage of other high carbon materials. 11. Further report, was also sought by the investigating officers from the NIT, Raipur, an institution of national importance, to determine the scope of any further loss other than what was considered in the analysis made by the Department. The report of the NIT clearly indicates that there was no possibility of any further loss that what has been considered by the Department in their calculations. In this regard Para 5 of the impugned order may be referred which is based on NIT report. In the regard it is also worthwhile to refer to Para 7 of the impugned order: 5. The NIT, Raipur (Institute of National Importance) was requested to comment up on the scope of any loss other than that considered in analysis made by the Department. The NIT clearly replied in negative and said all possible losses had been considered in the calculation made by the Department. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis, composition analysis was made on yearly basis to rule out any recording or clerical error crept in the above consumption. 7. The above said calculations were not mere theoretical calculations. Every melter/melting in-charge prior to charging the materials had to ensure that the heat lot that was going to be prepared of composition nearer to the specified/desired composition range on lower side. For that purpose, by doing these calculations, proportion of charge materials is adjusted in such a fashion that the desired composition was achieved with minimum addition of expensive materials like Ferro-Alloys or coke. In no circumstances excess composition in the heat was allowed as it would delay the production, raise the cost of production and also cause rejection by the customer. 12. It is also seen from Para 8.3 that the Appellants were during the course of audit specifically asked to explain the reasons for manufacturing MS ingots in their factory during the years 2006-2007 to December 2010 at a cost that was higher than the cost of MS ingots available in and purchased by them from the open market. But they did not respond to this query. It further emerges that once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingots which contain more than 0.35% carbon. Further he confirmed that they did not use high carbon steel ingots for producing TMT in their rolling mills 16. It is also on record that as per Indian Standard 2062:1999 (steel for general structural purposes) a maximum of 0.25% carbon was allowed in structural steels. The fact that noticee was manufacturing M.S.Ingots which itself was evident that they did not require carbon more than 0.25%. 17. Under these circumstances, prima facie it is proved that consumption of pig iron has been shown in excess than it is actually required. Utility of carbon in manufacture of MS ingots is only 0.25% but from the analysis of consumption of carbon, it is observed that per charge of carbon comes to 1.0% to 2.0%. With this carbon content, there can be no manufacturer of MS Steel. With this carbon content, only high carbon product can be manufactured. This factor indicate that actually required carbon for manufacture of M.S.Ingots is 0.25 but overall consumption of carbon shows leading a situation that excess receipt and abnormal consumption of raw material (pig iron) is shown which only indicates that some documents have been received without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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