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TMI Blog2019 (7) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant only because each and every MS bar and each and every ingots of raw material was not individually weighed by the visiting officers. The entire proceedings were conducted in a mutually agreed way which was the best possible practical and logical way of weighment. The appellant has failed to contradict the findings of the Panchnama except advancing an argument that since each and every MS bar or each and every MS ingots was not been weighed the shortage of finished goods and raw material by the officers through Panchnama dated 11/12/2008 cannot be relied upon. These arguments of the appellant are not legally tenable - The demand of duty amounting to ₹ 83,57,897/- on finished goods namely MS bars and an amount of ₹ 24,72,672/- on MS ingots found short, has rightly been confirmed by the impugned order-in-original. Demand of central excise duty amounting to ₹ 35,72,980/- on account of fake cash sale by adopting lower assessable value - HELD THAT:- Apart from Shri Pramod Gupta, the drivers of trucks or owners of transport vehicles have admitted that no transportation of old, rejected and pitted steel have taken place. Further the appellant did not advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of the appellant alongwith other related premises on 8 December 2008. After detailed investigations, the department issued a show cause notice No. C (H) ADJ/CE/72/76/10 dated 18 July 2011 whereunder following amounts of central excise duty have been demanded from the appellant on various counts :- (i) an amount of ₹ 83,57,897/- has been demanded under Section 11AC of the Central Excise Act, 1944 readwith Rule 25 of the Central Excise Rules on the ground that on physical verification of the finished goods namely MS bars a quantity of 1932.015 M.T. was found short when compared to the stocks of finished goods shown in the statutory books, such as, RG I register; (ii) reversal of Cenvat credit amounting to ₹ 24,72,672/- in respect of the inputs namely MS Ingots on which Cenvat credit had been availed by the appellant and on physical verification under Panchnama the quantity of raw material namely, MS ingots weighing 714.480 M.T. was found short as recorded under RG-23 registered by the appellant ; (iii) central excise duty amounting to ₹ 4,24,70,378/- under Section 11A on the ground that the appellant suppressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j.-I/CE-72/76/ 2010 dated 28 March 2018 re-adjudicated the matter and the charges made under the show cause notice were again been confirmed. Penalties under Section 11AC as well as under Rule 15 (2) of Cenvat Credit Rules, 2004 readwith Section 11AC of Central Excise Act, 1944 have also been imposed on the appellant firm, a penalty of ₹ 75 lakhs has also been imposed on Shri Shrivats Rathi (appellant No. 2 ) under Rule 26 (1) of Central Excise Rules, 2002. The penalty on various other counts have also been imposed on the appellant firm. 5. The appellants have assailed the above-mentioned impugned order-in-original. The learned Advocate appearing on behalf of the appellant at the outset mentioned that the appellant vide their letter dated 6 October 2017 has sought cross-examination of certain persons of the company who had shown lower burning losses in their factories and also the cross-examination of the Panch witnesses. It has been mentioned by the learned Advocate that the date of cross-examination was fixed for 18 October 2017 when Shri V.K. Aggarwal, the Advocate of the appellant cross-examined Shri Kewal Krishan, the driver who had stated that they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order-in-original is legally not sustainable. The learned Advocate has relied on Commissioner of Central Excise, Delhi I vs. M/s Kuber Tobacco India Ltd. reported in 2016 (338) E.L.T. 113 (Tri. Del.), wherein it has been held that :- (a) There is no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed as much as in adjudication proceedings as in criminal proceedings relating to prosecution. (b) Section 9D(1) sets out the circumstances in which a statement made and signed by a person before the Central Excise Officer shall be relevant for the purpose of proving the truth of the facts contained therein. (c) If the circumstances Specified in Section 9D(1) are absent, the statement, which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein as observed by the Hon ble Delhi High Court in the case of J.K. Cigarettes, 2009 (242) E.L.T. 189(Del). (d) In other words, in the absence of the circumstances spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erification done only on the basis of eye estimation cannot be a basis for demanding duty. The learned Advocate has relied on following decisions in this regard : (i ) Shiva Steel Rolling Mills vs. Commissioner of Central Excise, Kolkata II 2005 (186) E.L.T. 326 (Tri. - Kolkata) ; (ii) Satpushp Steels (P) Ltd. vs. Commissioner of Central Excise, Jaipur 2006 (196) E.L.T. 105 (Tri. Del.) ; (iii) Micro Forge (I) Pvt. Ltd. vs. Commissioner of Central Excise, Rajkot 2004 (169) E.L.T. 251 (Tri. Mumbai). 9. The learned Advocate has further submitted that the major demand of the central excise duty, which has been confirmed by the learned Adjudicating Authority in the impugned order, is on the allegation of the appellant claiming excess burning losses of the raw material in the manufacture of the finished goods namely MS bars. Learned Advocate contended that burning losses was on the higher side in the factory of the appellant due to defects in the heating furnace of the factory and for the reason that re-heating furnaces had some defects. According to the learned Advocate these factors resulted in excessive burning losses. The learned Advocate submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their report. (iv) We have been taken through the report of National Institute of Secondary Steel Technology which mentioned that overall yield and finish needed to be improved; scale losses were very high and needed to be reduced by controlling furnace atmosphere, rate of heating, output temperature and enhanced output. The Report further concluded that Factors responsible for higher fuel and energy consumption e.g. burner location, heat profile inside the furnace, oil pre-heat temperature, furnace leakage, reduction of oxygen level, etc. needed to be implemented without delay. The Institute also mentioned that the re-heating furnace of the 12 structural mill was designed to deliver 30 MT per hour but as the Mill was not designed to match it, hence, continuous high speed production was not possible. It resulted lower output of 27.1 MT in 2 hours and hence higher scale loss, more fuel and power consumption levels. (v) It has further been submitted that the appellant had followed the instructions and suggestions made by the NISST and as a result the burning losses has come down to the level of 2%. (vi) It has further been emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the case of Shree Electromelts Ltd. vs. Commissioner of Central Excise, 2011 (272) E.L.T. 94(T) wherein the Tribunal has held that The confirmation of demand on the basis of assessment by taking into account normal production as also the production which the assessee might have procured by relying upon electricity consumption, cannot be upheld. This is the mandate of law declared by Hon ble Supreme Court in the case of Triveni Rubber Plastics vs. Commissioner of Central Excise, 1994 (73) E.L.T. 7 (SC). Learned Commissioner failed to notice that the Department has not brought on record any material to show the transport and sale of the alleged finished goods and the production capacity of the machine. The charge of clandestine removal cannot be sustained on suspicion and excessive burning loss by itself does not prove the charge of clandestine manufacture and removal in absence of other corroborative evidences such as goods actually manufactured and packed etc. In this regard, reliance is placed in the case of Opel Alloys (P) Ltd vs. Commissioner of Central Excise, Ghaziabad 2005 (182) E.L.T. 64 (Tri-Del) . 12. Regarding the allegation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant between 10 to 12% are actually not correct and actual burning losses are somewhere between 2% to 4%. The appellant, on the other hand, had taken a technical advice from certain technical agencies and also from the National Institute of Secondary Steel Technology established under Ministry of Government Steel of India who after visit of the factory of the appellant had given a technical report dated 24 February 2009 whereunder report contains measures to improve the overall potential for energy conservation and to control waste and losses. It has also been claimed by the appellant that their re-heating furnace was not working properly resulting into heavy and unusual burning losses and they have claimed that for physical technical inspection of re-heating furnace of their plant, certain technical inspecting firm of furnaces had visited their factory and have suggested that burner location, oil pre-heat temperature, furnace leakage, reduction of oxygen level was not in proper condition and required repair or replacement. Thus, the appellant tried to substantiate that manufacturing facilities were not in the good condition and, therefore, the burning losses in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or in the order. Therefore, it is evident that no effort was made to collect any evidence in this regard. 18. In view of above, the charge of clandestine manufacture and clearance of quantity of 10259.730 M.T. of MS bars by claiming excess burning losses by the appellant has not been established by the Department and, therefore, the demand of duty on such quantities is legally not sustainable. While taking the above view, we rely on the Apex Court decision in the case of Oudh Sugar Mills Ltd. vs. Union of India 1978 (2) E.L.T. J172 (S.C.). The relevant extract is as under :- 7. Now, these calculations certainly involve some assumptions. The first is that the difference of 56 maunds noticed by the Assistant Chemical Examiner during the two and quarter hours test conducted by him on May 7, 1957 was uniform for every 2-1/4 hours working throughout the working hours of the crushing season which began on November 4, 1956 upto May 7, 1957 when the test was conducted. 8. The second assumption is that the persons in-charge of the operation of letting in mixed juice fill the tanks uniformly upto a level beyond the fixed mark and never be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the third party cannot form a basis for demanding a duty of central excise. 20. We also take note of this Tribunal s decision in the case of M/s R.A. Castings Pvt. Ltd. vs. Commissioner of Central Excise, Meerut I reported under 2009 (237) E.L.T. 674 (Tri. Del.). The relevant extract is as under :- 22. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to : (i) Receipt of raw material inside the factory premises, and non-accountal thereof in the statutory records; (ii) Utilization of such raw material for clandestine manufacture of finished goods; (iii) Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, discrepancy in the stock of raw materials and final products; (iv) Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, transporters documents, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One Bundle 120 kgs 4. 16 MM One Bundle 120 kgs 5. 20 MM One Bundle 120 kgs 6. 25 MM One Bundle 60 kgs 4.2 Therefore, allegedly all bundles of each size of M.S. Bar found available in the factory premises were counted and multiplied with the respective weight of each bundle. Chart was prepared and marked as Annexure B (R-JD-5) to the Panchnama dated 11.12.2008). The total weight of finished goods i.e. M.S Bar was found as under:- S. No. Size of M.S. Bar Total Number of Bundles Weight as each Bundle (Kgs.) Total weight (Kgs.) 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the weighment slip has also been taken and the quantity of the bundles of each size of MS bar was counted in the presence of Panchas as well as authorized representative of the appellant and thereafter the stock of available finished goods namely MS bars and raw material namely MS Ingots was arrived at by the officers as well as Panchas and the authorized representative of the appellant. The veracity of the Panchnama and the availability of the finished goods as well as the raw material on the date of visit cannot be challenged as an afterthought by the appellant only because each and every MS bar and each and every ingots of raw material was not individually weighed by the visiting officers. The entire proceedings were conducted in a mutually agreed way which was the best possible practical and logical way of weighment. The appellant has failed to contradict the findings of the Panchnama except advancing an argument that since each and every MS bar or each and every MS ingots was not been weighed the shortage of finished goods and raw material by the officers through Panchnama dated 11/12/2008 cannot be relied upon. These arguments of the appellant are not legally tenable. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editated design realizing higher sale price than the price embossed on the cigarette packets was established. In extricable links of versions in the recorded statement failed to dissociate the appellants from the grave of offence. Accordingly the materials recovered in the course of search and statements recorded by Revenue lead to irresistible conclusion that unfair practice was adopted by the appellants for their unjust enrichment at the cost of Revenue. The concepts of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. In view of the above the statements used in adjudication does not appear to have made the same arbitrary or capricious nor vitiates the same. Cross-examination : 21. No doubt reliance and testimony of a witness calls for cross-examination. The evidence in adjudication proceeding need not be like the one in criminal cases. Findings should be on the basis of preponderance of probabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or local knowledge of the type of, issue before them in order to supplement as well as evaluate evidence to find facts by inquisitorial methods, and inspections and to obtain information from other persons; but it will generally be a denial of justice to fail to disclose to a party specific material relevant to the decision if he is thereby deprived of any opportunity of comment on it. [Emphasis supplied] The Hon ble High Court observed thus :- In other words, it seems to be a fairly settled position in law that it is not necessary that persons whose statements have been previously recorded must be examined in the presence of the party against whom such previous statements are intended to be used. The rules of natural justice do require that their previous statements must be made available to the party against whom they were intended to be used and such party must be given a fair opportunity to explain the same or comment on them. What would amount to fair opportunity would depend upon the facts and circumstances of each case.... [Emphasis supplied] 21.2 The Apex Court in Surjeet Singh Chhabra v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an opposing party can rely upon, and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. This is so because an admission by a party is substantive evidence of the fact admitted, and admissions duly proved are admissible evidence irrespective whether the party making them appeared in the witness box or not and whether that party when appearing as witness was confronted with those statements in case it made a statement contrary to those admissions. An admission, if clearly and unequivocally made, is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted the fact admitted must be taken to be established. .. 26.2 Materials on record showed that there was no breach of natural justice. The SCN clearly depicted all the materials on which Excise authorities had relied to call for reply of appellants. When opportunity was given to reply on the specific charges levelled by the SCN, without filing a reply to that, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Shri Pramod Gupta, the drivers of trucks or owners of transport vehicles have admitted that no transportation of old, rejected and pitted steel have taken place. Further the appellant did not advance any explanation for clearance of old, rejected and pitted steel at the time of adjudication. The appellants claim that due to closure of the factory certain goods got deteriorated and they have to be cleared on lower price is without any evidence and the claim made by the appellant is devoid of any merit. The statement recorded of the concerned employees of the appellant also endorse the findings and the stand taken by the Department that fresh finished goods were cleared by the appellant by declaring the same as old, reject and pitted steel. The appellants have not produced any cogent explanation to contradict the findings given in the impugned order whereunder the Adjudicating Authority has confirmed the duty of central excise amounting to ₹ 35,72,980/- on this count. 28. While taking this view, are supported by the decision of Hon ble Supreme Court in GTC Industries Ltd. vs. Commissioner of Customs, New Delhi reported in 2011 (264) E.L.T. 433 (Tri. Del. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB on the amount mentioned in the preceding para given (i), (ii), (iii) ; (v) The findings given in the order-in-original with regard to demand of central excise duty amounting to ₹ 4,24,70,378/- and clandestine removal of finished goods on purported claim of excess burning losses are not sustainable. Accordingly, the demand on this count is dropped. (vi) The penalty of ₹ 5,44,01,255/- as confirmed under the impugned order-in-original under Section 11AC of the Central Excise Act, 1944 is reduced to ₹ 1,19,30,877/- in view of the aforesaid discussions. (vii) We also confirm the imposition of penalty of ₹ 24,72,672/- under the provisions of Rule 15 (2) of the Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act, 1944 for the raw material found short at the appellants premises during the visit of the officers. (viii) The amount of penalty on Shri Shrivats Rathi is reduced to ₹ 50 lakhs as per provisions of Rule 26 (1) of Central Excise Rules, 2002. 32. The appeals are, accordingly, allowed to the extent indicated above. (Order pronounced in open court on 15/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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