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TMI Blog2017 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... thod suggested in the notice. While there is a reasonable evidence of clandestine clearances, still the impugned order cannot be sustained as it travels well beyond the notice in the manner of estimation - Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 002, he further informed that the furnace was fully operational and fired in October 1997. He stated that from October 1997 to December 98 only one furnace of 2 ton per hour capacity was operational. He further informed that from October 97 onwards he used to handover finished castings to the finished goods section under cover of production reports. He further stated that during the said period samples/production was drawn and supplied to various customers including M/s. Spicer India, Pune and M/s. ZF Steering Gears Ltd., Pune. 3. Investigations were carried out and it was alleged that during the period 1997-98 till September 98 raw materials costing ₹ 69.00 lakhs was purchased and from October 97 to March 98 electricity worth ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged that the correspondence exchanged between them shows that the appellant had supplied various castings other than those covered by the invoices. Fax message together with test report dated 29/12/97 produced by ZF Steering Gears Ltd. pertaining to material test reports for two products, namely, (i) STG Housing (PTL) and (ii) STG Housing (Minidor). From this it appears that even prior to January 98, the appellant had cleared samples of castings to ZF Steering Gears Ltd. From the fax letter dated 20/11/1997, the appellant addressed to ZF Steering Gears Ltd. also indicated manufacture of castings and submission of samples by 30/11/97. Letter dated 16/11/97 and 28/01/98 ZF Steering Gears Ltd. addressed to the appellant giving delivery schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives the method of calculation of the cost of iron castings manufactured by the appellant: "23.1 In the trial balance of the casting division for the year 1998-99 total electricity consumption is worth ₹ 2,66,60,567/-. Therefore, the cost : power ratio comes ₹ 3.41 per kg of casting. The electricity consumption from October 1997 to March 1998, during which the plant was admittedly run is ₹ 30.52 lakhs. Applying the said cost : power ratio, the production cost of various types of castings produced during the said year would be 30.52 lakhs x 3.41 = ₹ 1,04,17,328/-. 23.2 Thus, the direct cost as per raw material and power consumption is ₹ 99.52 lakhs which fairly matches with the cost as can be worked by cost : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹ 4.47 lakhs and ₹ 5.86 lakhs vide accounting code No.13348 & 43111 for the year 1997-98. 9. On the basis of above evidence, it was held that the appellant had cleared castings without recording the same n the official records. The order-in-original notes that the appellant had purchased raw material worth ₹ 25.17 lakhs and the closing balance as per the statement of the employee was ₹ 22,805/-. It was noted that the appellant had taken credit of ₹ 5.86 lakhs during the year 1997-98 and therefore, the raw materials purchased was worth of ₹ 36,37,407/-. Consequently, it was held that the appellant had consumed raw materials worth ₹ 36,37,407/- ₹ 22,805/- = ₹ 36,14,602/- in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of production per unit of raw materials consumed to arrive at the value of production. He argued that it is not open to Revenue to change the basis of estimation. He argued that the entire exercise is based on the theoretical calculation and no evidence of clandestine removal has been produced. He further argued that the ratios of 1998-99 cannot be used as the ratios for the year 1999-2000, 2003-2004 are substantially different. He further argued that the balance sheet is to be the documents duly certified by the Chartered Accountant and the authenticity of the documents cannot be doubted without substantiating. He argued that the balance sheet shows that the raw materials purchased for ₹ 25.17 lakhs and not ₹ 36.00 lakhs as e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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