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TMI Blog2010 (9) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of consumption of electricity. They maintained a log book of induction furnace for production of ingots. Comparing the statutory production register, RG-1 and official heat register with the private records, it was observed that SSPL had not recorded production of 2335.253 MTs of M.S. ingots during the period 19.3.1988 to 30.4.1989. Similarly during the period 1.5.1989 to 31.3.1990, there was an excess unaccounted production of 1761.291 MTs. These worked out to 4096.544 MTs. It was tentatively found that SSPL was liable for payment of duty of ₹ 17,85,861.00 (BED) and ₹ 89,293.00 (SED). A note book bearing the title Ingots movement from SSPL to KSPL recovered from SSPL showed date-wise removal of ingots from 3.4.1990 to 3.3.1992. 58 weighment slips contained in a file recovered from SSPL pertaining to the period 2.12.1991 to 5.3.1992 tallied with entries in the Ingots Movement Register . It appeared that during the period 3.4.1990 to 5.3.1992, SSPL had removed 16,383.530 MTs of ingots whereas the statutory records of SSPL showed removal of 12,133.287 MTs, thereby suppressing removal of 4250.243 MTs of ingots involving duty of ₹ 25,62,459.00 (BED) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Hyderabad-III under Induction Furnace Annual Capacity (Determination) Rules, 1997 under his letter No. IV/16/92/97-CX., dated 1-10-97. Therefore, there is force in the plea of the appellant that when the capacity of the induction furnace is 2.1 MTs as shown by the manufacturer of furnace in 1987 and the same has been accepted by the Commissioner as on 1-10-97, then how the appellants can produce excess quantity which is not accounted for and which is said to have been cleared clandestinely. 6. Therefore, we are of the opinion that the matter needs re-examination especially in the light of production capacity of the factory and other related documents. Accordingly, the order of the Commissioner is set aside and the matter is remanded back to the Commissioner for re-determining the clandestine production, if any, and its clearance based on the evidence and re-adjudicate the case. 3. Adjudicating the Show Cause Notice in the remand proceedings vide the impugned order, the Commissioner has dropped the proposals contained in the show cause notice. The Commissioner found that the furnace installed in SSPL was of a capacity 2.1 MT per heat as reflected in the purchase invoice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPL, no discrepancies in the stock of ingots were found. In the absence of corroborative evidence, shortages found in the stock of MS scrap did not lead to a conclusion of clandestine manufacture and clearance of ingots. He dropped the proposal to demand duty on this count as well. He also dropped proposal to penalize S/Shri Krishna Rao and Seetha Rama Rao. He imposed penalty of ₹ 20,000/- on SSPL under Rule 173Q of CER. 5. In the appeal filed by the Revenue, the following grounds have been raised: (i) From the particulars in RG-1 Register and RT-12 returns filed by SSPL for the period 01.5.1989 to 31.3.1992, the assessee was operating furnace with a capacity of 3.5 MT per heat. This was also corroborated by the admission of Shri Krishna Rao, Director of SSPL in his statement dated 7.3.1992. He had stated that though the capacity of furnace was 2.1 MTs per heat, they were producing 3.5 MT per heat. Though this statement was described as incorrect in the reply to show cause notice dated 18.9.1995, he failed to explain as to why he had initially given a wrong statement and retracted the same after more than two years. The allegation in the show cause notice as to the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gots. The Revenue seeks to rely on the judgment of the Supreme Court in the case of Collector of Customs Vs. D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.)] in support of the claim that there was enough evidence to prove the charge against SSPL by preponderance of probability. (v) As regards the excess production, the private heat register for the period 1.5.1989 to 31.3.1990 exactly tallied with the corresponding entries in the electricity consumption register. The clandestine clearance of 4257.773 MTs as per Ingots movement register and weighment challan recovered for the period 03.04.1990 to 05.03.1992 was corroborated by clandestine production of 4250.243 MT worked out from the private heat register for the said period. The determination of ACP by the Commissioner was not relevant to decide the charges against SSPL. 6. Heard both sides. 7. We have carefully perused the case records and rival submissions. One of the grounds raised by the Revenue is that during the period 1.5.1989 to 31.3.1992, the RG-1 register of the assessee and RT-12 returns filed by it showed that the capacity of furnace was 3.38 MT per heat. Shri N. Krishna Rao, Director of SSPL in his statement dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 575 M.Ts 17,528.51 M.Ts 5. Average weight of Ingot during the above period (4 divided by 2) 92.341 Kgs 88.365 Kgs 6. Average quantity produced per Heat (4 divided by 1) 3.7889 M.Ts 3.38127 M.Ts We do not find any categorical admission by Shri Krishna Rao to the effect that the assessee was producing 3.5 MTs per heat regularly during the material period. He had retracted the apparent admission in the initial statement to the above effect. 7.2 The capacity of the furnace of SSPL as per the invoices of the manufacturer of the furnace was 2.1 MT per heat. There is no evidence on record that the assessee had altered the parameters of the furnace to enhance its capacity. The assessee had only indicated that it was feasible to enhance the capacity by manipulation of crucible of the furnace. There is no evidence or finding to the effect that SSPL had carried out such an alteration. The Commissioner of Central Excise, Hyderabad-III had determined the capacity of the induction furnace at 2.1 MTs under the Induction Furnace Annual Capacity (Determination) Rules, 1997 vide his letter No. IV/16/92/97-CX dated 1.10.97. Though the capacity determined under the above rules is a notiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not record it in the Form IV register. We find that such a conclusion may not be justified. It is argued that since the assessee had not maintained the prescribed statutory records properly, the burden of proof squarely lay on them to show that the excess quantum of ingots recorded in the private records compared to the statutory records was only due to the inclusion of defective ingots, runners, risers, etc. in their private registers as claimed. This argument has merit. We find that it is necessary to give SSPL another opportunity to discharge this burden with evidence that existed at the time of booking the offence case against them. 9. As regards the clandestine clearance based on the note book titled Ingots Movement from SSPL to KSPL , the Commissioner had found no evidence for such a finding. Scrutiny of records of KSPL had not indicated any such receipt. On the date of visit of the officers, no variation in stock of ingots was found at SSPL or KSPL. In the appeal filed, the revenue has not raised any valid challenge to the Commissioner dropping the charge of clandestine clearance of ingots to KSPL except that the charge was supported by clandestine production of 4250.30 M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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