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TMI Blog2018 (11) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... South East Central Railway vide his covering letter dated 5-03-2008 had given a list of 156 consignments, which has been made relied upon Documents as evident from the SCN and paper book submitted by the Appellant. In the case of M/s. SPIPL the said chart appears to have been prepared by the Revenue itself. And not by the Railway Authority. In absence of original RRs the Revenue cannot allege it could not be as to which of the Appellants had actually lifted the Iron Ore. It was, therefore, absolutely necessary that the department should have obtained original copies of RRs and examined the same to arrive at a definite conclusion regarding the party which actually lifted the Iron Ore from the endorsements carried out in the said RRs and should have examined as to whether a particular manufacturer/ Appellants had entered the said quantity in their statutory records or not. Further, no reliance can be placed on the said chart as in respect of 98 RRs out of total 156 RRs, there is no entry under the column “endorsement” as this column has been left blank. Regarding the allegation and finding about the receipt of unaccounted quantity of Iron Ore on the basis of records of M/s. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) And MR. BIJAY KUMAR, MEMBER (TECHNICAL) Shri K. Kurmy, K.K. Anand, A.K. Mishra, Ajay Sharma, Abhas Mishra, Advocates for the appellants Shri R.K. Mishra, H.C. Saini, DR for the respondent ORDER Per: Bijay Kumar 1. All these have been filed by the respective Appellants along with their officials such as Directors, Authorized signatory and General Manager. The six main Appellants are manufacturers. 2. All the six manufacturers are engaged in the manufacture of Sponge Iron for which Iron Ore is the principal raw material. Apart from Iron Ore, Coal and Dolomite are other important raw materials which are used in the manufacture of Sponge Iron. 3. Also during the material period the Iron Ore was transported from various Iron Ore mines situated in Orissa to the Railway siding at Uslapur, Bilaspur (C.G) through Rakes. The said Iron Ore was unloaded at Uslapur Railway siding and further transported to the factory premises of five out of aforementioned six manufacturers of Sponge Iron by one M/s. Gyan Singh a transporter of Bilaspur. In the case of M/s. MSSPL, the said transportation was undertaken by one M/s. Amit Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red up to 21-6-2007. He added that the quantity of Iron Ore received in the factories of the appellants were recorded as per telephonic information received from them. In case of any discrepancy, remark was put in the record for purpose of payment of freight. He admitted that as on 16-07-2007, they had received all payments from Sponge Iron Manufacturers/Appellants to whom they had transported the Iron Ore either by cheque or in cash. He clarified that in some cases where transportation bills were not issued by the appellant/assesses, the freight charges were received in cash only. He also admitted that sometimes the bills were raised for lesser quantity than actual quantity received as per requirement of the assesses but amount was paid for actual quantity transported by them. He also elaborated and explained the purpose of maintaining of each record. 8. The premises of M/s. Amit Roadlines was also searched on 21-6-2007 and records were withdrawn as per four panchnamas dated 21-6-2007, 4-7-2007, 6-7-2007 and 20-11-2007. Statements of Shri Ajay Chobay, Manager M/s. Amit Roadlines were recorded on 21-6-2007, 8-8-2007 and 20-11-2007 wherein he explained the purport of the various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory due to poor quality of Iron Ore, poor quality of coal and inexperienced technical staff. 11. However, the show cause notice were issued to all the six manufacturers wherein it was alleged that they had received excess quantity of Iron Ore on the basis of information provided by the Railways and also on the basis of records seized from M/s Gyan Singh in respect of five manufacturers and in respect of M/s. SPIPL by M/s. Amit Roadlines. The department by adopting the formula of input output ratio that 1.6 MT of Iron Ore could manufacture 1 MT of Sponge Iron demanded duty on Sponge Iron. The details of unaccounted quantity of Iron Ore allegedly received by all the six manufacturers and quantity of Sponge Iron allegedly manufactured out of the same can be summarized in the following chart:- No. Name of the Appellant Quantity allegedly received as per the information provided by the Railways Quantity allegedly received on the basis of the records seized from M/s Gyan Singh Total Quantity of Iron Ore Quantity of Sponge Iron allegedly manufactured out of the said quantity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix matters were taken up together and one common adjudication order has been passed. In some of the remand orders directions were also given to allow cross examination of the witnesses on whose statements reliance was placed. 13. That, during the remand proceedings dates for cross examination of Sh. Dilip Kumar Markam were fixed on different dates. However the Principal Commissioner in para 19.1 of his Order has observed that Sh. Dilip Kumar Markam died in road accident two years back. However, the cross examination of M/s. Gyan Singh and Sh. Manoj Agarwal, Director of M/s. ASPPL was conducted by M/s. RMIPL. 14. The Principal Commissioner has passed one common Order in respect of five manufacturers. In respect of M/s. MSSPL a different Adjudication Order has been passed. That, apart from confirming the duty demand under the Central Excise Act, demands have also been confirmed under proviso to Section 73 of the Finance Act, 1944 against the liability of Service Tax on transport of goods by road service on transportation expenses of Iron Ore, which according to him the receipt, which was suppressed and the same has been ordered to be recovered. Penalties under different Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed @ ₹ 200/- every day under Section 76 of the Finance Act, 1994. @ ₹ 200/- Amount of penalty imposed under Section 77 of the Finance Act, 1994 Rs.5,000/- (iv) Details of duty demanded confirmed and penalties imposed in respect of M/s. KIPL. Duty amount confirmed under Section 11A(1) of the Central Excise Act, 1944 Rs.9,97,91,551/- Amount of Penalty imposed under Section 11AC of the Central Excise Act, 1944 Rs.9,97,91,551/- Amount of Service Tax confirmed under Section 73(1) of the Finance Act,1994. Rs.1,23,047/- Amount of penalty imposed under Section 78 of the Finance Act, 1994 Rs.1,23,047/- Amount of penalty imposed @ ₹ 200/- every day under Section 76 of the Finance Act, 1994. @ ₹ 200/- Amount of penalty imposed under Section 77 of the Finance Act, 1994 Rs.5,000/- Amount of penalty imposed on the Shri Akhilesh Singhania, Director under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That, no reliance can be placed on the statements of Sh. Dilip Kumar Markam as his statements could not be tested on cross examination. Further he had not implicated the aforementioned Appellants. His statement was of a general nature. Further, when the statements from the Authorised Signatory of M/s. SPIPL, Directors of M/s. KIPL and M/s. RMIPL were recorded, they were not confronted with the two statements recorded from Sh. Dilip Kumar Markam. (iv) The statements of Sh. Dilip Kumar Markam were based upon the records which were never relied upon in the show cause notice. In any event in one of the appeals of M/s. RMIPL, the cross examination of Sh. Gyan Singh was held on 21-08-2016 wherein he categorically stated that he was receiving the freights charges only through cheques and denied having received any freight charges through cash. He further stated that records maintained by Sh. Dilip Kumar Markam were incorrect. (v) There is absolutely no basis for alleged receipt of extra quantity of Iron Ore on the basis of the records of M/s. Gyan Singh over and above the allegation of receipt of Iron Ore through RRs. Attention was drawn in respect of several consignments which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared on the basis of statement of Railway goods clerk who was not examined by the Department. (iii) That, no evidence was produced that Sh. Dilip Kumar Markam had died two years back. (iv) That, without coal and dolomite it is quite improbable rather than technological impossible to manufacture Sponge Iron. (v) That, the department had not adduced any scientific and technically literature in support of their formula M/s. ASSPL had adduced host of documents to substantiate that the Iron Ore used by them were of poor quality with Fe 59 to 63% as against ideal norm of Fe 65% + and also they have used poor quality of Coal with FC 23% to 30% as against ideal norm of FC 45%. They had submitted copies of purchase invoices of Iron Ore, Coal and Test Certificate etc before the adjudicating authority to prove use of poor quality of raw materials. (vi) The purported under capacity utilization low yield of Sponge Iron, higher electricity consumption were due to consumption of poor quality of Iron Ore of Fe 59% to 63% as against ideal norm Fe 65% and consumption of poor quality of Coal of Grade E/F with FC 23% to 30% as against ideal norm of FC 45%. The ideal norm of electricity con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kam had also stated that they were receiving freight through cheques and cash and in some of the freight bills the actual quantity of Iron Ore was shown to be less. Similar is the case with regard to M/s. MSSPL where one Shri Amit Roadlines was transporting Iron Ore from Uslapur Railway siding for the said manufacturer. (iv) He relied upon the law laid down by the Hon ble Apex Court in the case of Commissioner of Customs Vs. D. Bhoormul reported at 1983 (13) ELT 1547 and other judgments wherein it has been held that the Revenue was not required to prove its case with mathematical precision. 19. We have heard the rival submissions and perused the Appeal records. 20. The main issue is to be decided in these appeals are whether huge duty demand can be confirmed merely on the basis of information provided by the Railways and as to whether the duty demand can be confirmed without examining and relying on the original copies of the RRs. We have also to examine as to whether the duty demand can be confirmed merely on the basis of the charts relied upon by the Revenue which has been stated to be prepared on the basis of the records seized from the transporters. The allegation of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown as the consigner and not the consignee. Further, in many cases the parties have taken a stand that under the same RRs duty has been demanded from more than one Appellant. A perusal of the information supplied by the Railways reveals that though in many of the RRs consigner, consignee and the lifter has been shown the same person but there are numerous entries where the consigner, the consignee and the party which lifted the material is different from consigner and consignee. There are many entries where the material was lifted by parties like M/s. Jai Ambey Fuel (P) Ltd. and M/s. Bankhe Bihari Enterprises which were treated to be fictitious parties in the Show Cause Notices without bringing any evidence on record to this effect. There is no finding by the Adjudicating Authority that these parties were fictitious or non-existent in any manner. For example in the case of M/s. SPIPL a huge quantity of around 1100 MT was endorsed by M/s. SPIPL to M/s. Bankhe Bihari Enterprises and M/s. Jai Ambey Fuel (P) Ltd. but the same has been treated to be received by M/s. SPIPL. There are numerous entries where though the chart supplied by the Railway showed that quantities were lifted by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entic. We find that Shri M/s. Gyan Singh, in his cross examination categorically stated that he was receiving the entire freight from all the manufacturers/ Appellants of Sponge Iron through cheques only which would mean that there is no scope of receipt of transportation of any unaccounted quantity of Iron Ore. This averment of Sh. Gyan Singh was never controverted by the Adjudicating Authority in his Order. 22. In support of the submission that the charges of clandestine removal cannot be sustained on the basis of RRs and records of the transporters which are third party records reliance has been placed on the following judgments: (i) 2015 (327) ELT 81 (Tri.-Del) Aswani Co. Vs. Commissioner of Central Excise, Delhi-1. (ii) Final Order No. A/50025-50028/2016-EX (DB) dated 15-01-2016 in the case of M/s. Balajee Perfumes. (iii) High Court Order dated 11-04-2017 in the case of M/s. Balajee Perfumes. (iv) 2017 (357) ELT 490 (Tri-All) P J Aromatics Vs. CCE, Kanpur. We find that the present cases are more similar to the judgment of this Hon ble Tribunal in the case of P J Aromatics, (supra). In this duty was demanded and confirmed on two counts. There was demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) Rama Shyama Papers Ltd Vs. CCE, Lucknow 2004 (168) ELT 494 (Tri. Del). (viii) Shree SidhbaliIspat Ltd Vs. CCE, Nagpur 2017 (357) ELT 724 (Tri. Mumbai). Of the above judgments the two which are quite relevant in the facts and circumstances of the case are that of Vishnu Co. (P) Ltd. rendered by Hon ble Delhi High Court and another of Hon ble Patna High Court in the case of Brims Products, supra. In the case of Vishnu Co. Pvt Ltd. the Hon ble Delhi High Court has held records of the transporter cannot be relied upon to prove the charge of clandestine removal. It was further held that it was for the department to explain why entries in the documents seized from the transporters were not further investigated by them and that it was for the department to establish link between such evidence and the assessee. The Patna High Court in the case of Brims Products, supra also laid down the law that unaccounted receipt of raw material is not the conclusive proof of production of clandestine sale of finished goods. It has further been held that even if the records of the transporter show that one main raw material was received clandestinely still the Revenue has to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand there is not even an allegation that M/s. KIPL or M/s. ASPPL had received any unaccounted quantity of Iron Ore. It cannot be denied that both the manufactures were receiving Iron Ore from Railway rakes, Uslapur and entire quantity of their Iron Ore was being transported by M/s. Gyan Singh. There is not even an iota of evidence that the quantity required to manufacture 29177.18 MT in the case of M/s. KIPL and quantity of Iron Ore required to manufacture 22014.066 MT in the case of M/s. ASPPL was received by these two manufacturers during the said period which was not recorded in their statutory records. Hence any duty demand on this quantity is wholly unjustified and not based on any evidence whatsoever. 26. We find that for the entire duty demand the Adjudicating Authority has also given finding that there has been abnormal trend in the monthly production of all the units and they had also consumed higher electricity during certain months. It has also been held that in some months the Appellants had shown low recovery of Sponge Iron from Iron Ore. He has, therefore, held that this was a collateral evidence to substantiate the allegation in the show cause notice that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reported in 2008 (221) ELT A25 (Guj). (iii) Mahavir Metals Industries Vs. Commr. Of Central Excise Customs, Daman, Vapi reported at 2014 (313) ELT 581 (Tri. Ahmd). (iv) Mittal Pigment Pvt. Ltd Vs. CCE, Jaipur reported at 2018 (360) ELT 157 (Tri. Del). (v) Nav Karnataka Steels Pvt. Ltd. Vs. CCE, Belgaum reported at 2008 (225) ELT 454 (Tri. Bang). (vi) Polyfill Sacks Vs. Commissioner of Central Excise Customs, Vadodara-1 reported at 2009 (245) ELT 806 (Tri. Ahmd). (vii) Hindustan Coca Cola Beverages Pvt. Ltd Vs. Commr of Central Excise, Thane-1 reported at 2006 (205) ELT 700 (Tri Mum). 26.3 There are also numerous judgments on the issue that duty cannot be demanded merely on the basis of higher consumption of electricity. In this regard, counsel has relied upon the following judgments: (i) R.A. Castings Pvt. Ltd Vs. CCE, Meerut-1 reported at 2009 (237) ELT 674 (Tri. Del). This judgment of the Tribunal was upheld by the Hon ble Allahabad High Court as reported at 2011 (269) ELT 337 (All). The appeal of the Revenue was also dismissed by the Hon ble Supreme Court as reported at 2011 (269) ELT A108(SC). (ii) Om Shanti Steel Castings Pvt. Ltd Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traders Pvt. Ltd., reported in 2014 (303) ELT A24 (S.C.). (ii) Mohan Steels Ltd. Vs. Commissioner of Central Excise, Kanpur, reported at 2004 (177) ELT 688 (Tri-Del.). (iii) A.R. Shanmugasundaram Vs. Commissioner of Central Excise, Salem, reported at 2016 (333) ELT 158 (Tri.-Chennai). 28. We accordingly hold that in absence of evidence of procurement of all the raw materials in proportionate quantities its cannot be concluded that the Appellants have included in the clandestine manufacture sponge Iron, the final product. 29. We find that demand of ₹ 16,89,789/- from M/s. PIPL on a quantity of 1367.62 MT of Sponge Iron. It has been contended by the learned Counsel that the said demand is based upon certain private records. They had requested for the cross-examination of Shri Shailendra Kumar Thawait, Manger (Accounts), M/s. Phil Ispat P. Ltd. Bilaspur, Shri P.S. Rao, General Manager (Plant), M/s. Phil Ispat P. Ltd., Bilaspur, Shri Amit Patel, Laboratory Assistant, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Niveet Mittal, Ex-Director, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Pradeep Jha, Ex-Director M/s. Phil Ispat P. Ltd., Bilaspur, and Shri Manoj Sharma, General Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payments, if any, received against alleged removal of Sponge Iron by any of the six manufacturers. (h) No evidence of transportation of clandestinely removed Sponge Iron from the factory of the six manufacturers. (i) No evidence of delivery of Sponge Iron at destination by any of the six manufacturers. 33. We, therefore, hold that since in these appeals there is no evidence of clearance of finished goods duty demand on the Sponge Iron cannot be sustained. 34. The learned Authorised Representative relied upon the judgment of the Hon ble Apex Court rendered in the case of Collector of Customs, Madras and Others Vs. D. Bhoormull, reported in 1983 (13) ELT 1546 (S.C.) and few other judgments. According to him in these judgments it was held that in cases of clandestine removal of goods Revenue was not required to prove its case with mathematical precision. This submission of the learned Departmental Representative cannot be the countanced. There are several judgments wherein it has been held that allegation of clandestine removal is a very serious charge and has to be proved with independent, corroborative and tangible evidence where the judgments relied upon by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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