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TMI Blog2017 (4) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... stant. Even otherwise the capacity of furnace can not be a ground to demand duty. It has to be shown that the goods were indeed manufactured in the Appellant factory and the same were cleared - In absence of evidence of receipt of raw material and clearance of finished goods, absence of buyers and receipt of any money consideration, the charges of clandestine removal cannot be sustained. Appeal allowed - decided in favor of appellant. - E/2286 TO E/2290/06-MUM, E/CO/439/06 & E/CO/464/06-MUM - A/86362-86368/17/EB - Dated:- 15-3-2017 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri. V.M. Doiphode, Advocate for the Appellants Shri. V.K. Agarwal, Addl. Commissioner(A.R.) for the Respondent Per: Ramesh Nair These Appeals are directed against Order-in-Original dt. 05.09.2005 passed by the Commissioner, Central Excise, Aurangabad whereby following demands and penalties were confirmed against Appellants: (i) Duty demand of ₹ 92,12,475/- on removal of MS Ingots and of ₹ 73,440/- on by-products viz. runners, risers was confirmed against M/s Ambika Waste Management Pvt. Ltd. (ii) Demand of ₹ 39,780/- on cenvatable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed penalties, however he held that out of 300 MTs of seized MS scrap, the quantity of 191.820 MT was found to be entered and hence not liable for confiscation. 3. Shri V. M. Doiphode learned counsel appearing on behalf of the appellants, submits that the demands have been confirmed and penalties have been imposed wrongly. He submits that the allegations in the show cause notice were mainly based upon the statements dt. 04.11.2004 of Shri Kishore Kothari, accountant of the Appellant firm wherein he accepted use of unaccounted scrap in production and his subsequent statements. That the statements of director have also been relied upon by the Commissioner. However the statements have been recorded under pressure and the same are not corroborated with any independent evidence. He submits that the demand of ₹ 92,12,475/- on alleged removal of MS Ingots has been confirmed by considering the assumed estimated receipt of unaccounted MS Scrap of 80 to 100 MTs per month for the period 2000 - 01 to September' 2004 and for the period Oct and Nov 04 the demand was made on the basis of dispatch weighing slips. There is no evidence of transportation or receipt or payment of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the goods were cleared by Appellant. That even in some challans the consignors are different persons and not Appellant. He further submits that the Ld. Commissioner has wrongly held that the normal power consumption is of 700 units per MT as against 868 shown by the Appellant as it is nowhere appearing in records as to from where the average consumption is 700 Units was arrived at. He relies upon letter by DG Audit which refers to technical opinion of consumption of 555 to 1026 MT per Unit depending upon thermal mix and nature of raw material. He submits that the reliance has been wrongly placed upon the statements of Shri Kishore Kothari and Shri Umakant Mahajan as none of them was concerned with the activity of weighment of raw material and finished goods. In their cross examination both of them have denied the contents of the statements and hence the statements cannot be relied upon. That as there is no investigation from even a single transporter or consignee, it cannot be said that the goods were clandestinely removed. He also submits that as far as raw material is concerned except statements there is no corroborative evidence to show that Appellant received any exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning stock of finished goods was 70.040 MT while actual weighment in BSR was found to be 75.495 MT and a 30.130 MT of quantity was found to be loaded in a vehicle covered by the invoice. The excess quantity worked out had arisen only due to the reason that the factory was working in three shifts and one entry of finished goods is made after completion of day. The officers during their visit did not let the Appellants enter the previous day production which resulted into excess quantity. The officers visited on 11AM on 04.11.2004 and therefore the production after midnight remained unrecorded. The excess found goods were production of previous day which was to be entered in next day morning, the charge of non accountal of goods is absolutely illegal. 3.3 As regard demand of ₹ 73,440/- on runners and risers and ₹ 39,780/- on cenvatable raw material, he submits that the demand is based upon the statements of Shri Kishore Kothari and Shri Raju Gorade and entries in loose slips. He submits that the demands are not sustainable as there is no evidence of removal of goods. 4. Shri V.K. Agarwal, learned Additional Commissioner (AR) appearing on behalf of the Revenue reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e piece of evidence. The question is not so much as to admissibility of such statement as much as it is about its 'reliability . It is the latter requirement that warrants a judicial authority to seek, as a rule of prudence, some corroboration of such retracted statement by some other reliable independent material. This is the approach adopted by the CESTAT and the Court finds it to be in consonance with the settled legal position in this regard. We find that apart from placing reliance on statement of Shri Kishore Kothari and compilation statement signed by director no other evidence of receipt of unaccounted MS Scrap has been brought on record. We find from the statement of Shri Abasaheb Santosh Nagargoje, Partner of M/s R.L. Scrap Merchant and director of the Appellant Units which was recorded on 06.11.2004 that nowhere he has stated that the unaccounted scrap was sent to Appellant Unit. He has clearly stated that M/s R.L. has sent 20 to 22 MT of all types of scrap which was purchased in cash to their Ahmednagar office and other scrap to Appellants under excise challan. No evidence in the form of sellers/ brokers of such scrap or transportation to Appellant factory has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers the capacity of molten material was found to be 5.450 MT and 5.600 MT. In this context we are of the view that if some more quantity can be processed in the furnace than its installed capacity the same cannot be made a ground to allege that the assessee always processed the goods more than the installed capacity. The Appellant in his submission has stated that the pressed Scrap will take less space rather than non pressed scrap and therefore the processing capacity of furnace would vary. We are of the view that otherwise also the processing capacity of the furnace would depend upon the nature and quality of raw material as well as other factors. The maximum capacity result of a heat cannot be applied in each and every heat. Therefore the results of yield would vary and cannot remain constant. Even otherwise the capacity of furnace can not be a ground to demand duty. It has to be shown that the goods were indeed manufactured in the Appellant factory and the same were cleared. In absence of evidence of receipt of raw material and clearance of finished goods, absence of buyers and receipt of any money consideration, the charges of clandestine removal cannot be sustained. 5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that the adjudicating authority in respect of submission of Appellant has termed the same as afterthought. The Appellant had argued that the goods were production of night shift of 04.11.2005 which were to be recorded next day i.e 05.11.2005 but due to visit of investigation officers the same could not be entered. We find that against the Appellant plea that the stock found in excess pertained to previous day production, no contrary fact is coming on record and their claim has not been held otherwise contrary. Further at the time of the visit of the officers the goods were being cleared legally and no evidences of removal of goods being cleared clandestinely was found. In such case there is no reason to confiscate the goods. Similarly the confiscation of alleged excess stock of 108.180 MT of MS scrap is not legal as the stock was not physically verified. The excess stock has been alleged only on the basis of weighing slips and it was held that the same were not entered into. We find that there has been no investigation as to whether the goods found stated in weighing slips were consigned to the Appellant or came to Appellant factory only for weighment purpose. The relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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