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TMI Blog2015 (9) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... I concur with the view taken by the Hon’ble Member Judicial relying on the decision of Adit Ispat (2013 (11) TMI 439 - CESTAT NEW DELHI) to make pre-deposit of ₹ 30.00 lakhs at this stage. - Stay granted partly. - E/56825-56826/2013-EX(DB) - Stay Order Nos. 51127-51128/2014-EX(DB) - Dated:- 14-3-2014 - Ms. Archana Wadhwa, Member (J) and Shri Manmohan Singh, Member (T) Third Member on reference : Shri Ashok Jindal, Member (J) Shri Alok Barthwal, Advocate, for the Appellant. Shri S.K. Panda, Jt. CDR, for the Respondent. ORDER [Order per : Archana Wadhwa, Member (J) (for the Bench)]. - The appellants are engaged 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 resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions of the Tribunal. In view of his above submission, he also submits that subsequently they have also procured the certificate from National Institute of Secondary Steel Technology, which is an Government organization in support of their defence that raw material procured by them is sufficient. 4. Learned Jt. CDR for the Revenue supports the impugned order of Commissioner and submits that there is sufficient evidence on record to indicate that appellants have been indulging in other procurement of raw materials. 5. After appreciating the submission made by both the sides, we take into consideration the recent order passed by the Tribunal in the Adit Ispat v C.C.E, 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 ₹ 25 lakhs out of total duty of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ingot which itself was an evident that they did not require Carbon more than 0.25%. 4. From the above analysis it can be seen that the steel that can be made out of the recorded raw material proportion is of High Carbon Steel ingot with 1.01% C and 0.67% C, but not mild steel ingots (with carbon below 0.25%) in said period. But what the Noticee produced was Mild Steel ingot/billets. Simultaneously, the above analysis also shows the fact that, had they recorded production by the proportion as per the practice adopted in induction furnace industry, the required composition was achievable, with just 2115 MT, 2125 MT, 2839 MT, 4010 MT and 1558 of Pig iron only against the recorded usage of 6552 MT, 7662 MT, 8370 MT, 8775 MT and 4539 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 determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be on lower side of the range all through the year. In the instant case also the carbon content would automatically exceed the upper limit (0.25%) if any of the raw materials contains carbon above the lower limit even by adopting general proportion which further reduced the requirement of pig iron or its substitutes. (iv) Carbon recovery from Coke, in the furnace may be at 90%. But if due care is not taken to charging, the recovery may come down to 60% yield. In the calculation it was assumed that in the worst conditions they might have recovered only 60%. (v) Though consumption and production data was available in raw material stock register (Form IV) and daily stock account (RG 1) on day to day basis, 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. So the opinion of NIT Raipur supports the stand taken by the Department. 15. It is also very important to refer statement of Shiv Kumar Devangar AGM (FA) (a) They do not keep chemical test report/records of raw materials (b) M.S. ingots means non-alloy mild steel ingots. It contains mainly carbon (0.15% to 0.35%), sulphar, iron (c) M.S. ingots containing more than 0.35 carbon causes problems during rolling. This generates miss rolls. It gets catched in the rolls and even get torned. (d) He stated that high carbon steel ingots means 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 circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1.25 crores is to be ordered as held by Member (Technical). 21. The facts of the case are not in dispute. Therefore, same are not recorded here. 22. The ld. Counsel for the applicant submits that in this case demand has been confirmed by disallowing the input credit on the raw material consumed by the applicant in Induction Furnace for manufacturing of mild steel (M.S.) Ingots and steel structures on account of higher consumption of the inputs. The pattern of consumption has been decided on the basis of data provided by NIT Raipur showing that the pattern of yield is 92 to 95% of the raw material used for the manufacturing of final product. No investigation in the factory of the applicant has been done by the Department and there is no allegation by the Revenue that the applicant has not received the input in their factory or input having been cleared as such or the goods have been cleared without payment of duty. NIT Raipur has also not done any investigation in the factory of the applicant to come to the conclusion that the wastage of 5 - 8% is admissible. On the other hand, he submits that as per the report of NISST, Raipur the wastage can be 20 - 25% and a survey was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal has found that the case has been made out by the Department on the basis of NIT report wherein finished goods were to be manufactured to the extent of yield of 94% of the pig iron used, that is based on the report obtained from NIT, Raipur. But in that case also, the applicant has produced one report showing their consumption pattern of input is correct but in that case the applicant themselves have made an offer to deposit 5 % of the duty as a condition of hearing of the appeal and in this circumstance, after considering the financial hardship of the applicant, this Tribunal has directed to make a pre-deposit of 25.00 lakhs out of total demand of ₹ 5.53 crores. 26. In the case in hand, the applicant has not made any offer for pre-deposit to hear their appeals. Therefore the decision of Aditi Ispat (supra) as submitted by the Id. AR is not applicable to this case. In that case, this Tribunal has considered only financial hardship. 27. Therefore, I have to go into the issue before me and in this case the applicant has produced 2 reports showing consumption pattern of the input which show that the pattern the consumption shown by the applicant is correct. Further, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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