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TMI Blog2020 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be charged on the goods produced or manufactured - It is found that no physical verification of input consumption qua finished goods manufactured thereto was carried out by the department. The duty has been demanded on the basis of audit objection without causing any investigation. The objection of audit cannot be the basis or reason to believe to further investigate the matter and cannot be the sole ground for holding clandestine manufacture and removal, in absence of any corroborative evidence. It is observed from records that neither investigation has been carried out from any buyer of finished goods nor from any transporter nor any flowback of funds was checked and neither any statement brought on record to substantiate clandestine removal without payment of duty. It is found that no SION number was given in the show cause notice while learned Adjudicating Authority has relied upon SION number C-460 C-514. Thus, he has travelled beyond the Show Cause Notice. The Tribunal in the case of M/S. SARADHA TERRY PRODUCTS LTD. AND SHRI K. JAYARAJ VERSUS CCE, SALEM [ 2015 (1) TMI 678 - CESTAT CHENNAI] held that in absence of evidence of removal of excess yarn or finished go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -20 dated 28.05.2019 issued under CNo. V(15)/54/ Adj/ASN-II/CGST/Bol/18/285 dt. 07.06.2019 and Order-in-Original No. 06/Commr/BOL/19-20 dated. 26.06.2019 issued under CNo. V(15)102/ Adj/ ASN-I/CGST/Bol/18/426 dated 04.07.2019 respectively, both passed by the Commissioner, CGST Commissionerate, Bolpur 2. The learned Counsel for the appellants submits that issue involved in both the appeals is identical though Orders-In-Original are different and states that the same can be disposed off by a common order. The learned Authorized Representative of the department agreed with the contention of learned Counsel. Both the appeals are taken up together with the consent of both the parties for passing a common order. The facts as culled out in brief are:- Appeal No. E/77116/2019 3. The appellant are engaged in the manufacture of different items of Iron Steel classifiable under tariff chapter 72 73 of Central Excise Tariff Act, 1985 . They are holding Central Excise Registration and availing CENVAT Credit in respect of inputs used in the manufacture of their final products. 4. A show Cause Cum Demand Notice No. 04/Commr/BST/DGP Audit/2018 dt. 06.04.2018 was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately, willfully and clandestinely removed finished goods (by showing reduced input output ratio to department) without payment of duty of ₹ 15,43,94,279/- during the period 2012-13 to 201617. The amount of ₹ 15,43,94,279/-was proposed to be recoverable under provisions of section 11 A(4) along with interest under section 11AA of Central Excise Act, 1944. The penal provision under section 11AC of the Act invoked. 5. The appellant submitted reply to show cause notices vide their letter dated. 29.09.2018 and inter-alia denied the allegation made in the Show Cause Notice. The demand of duty was contested besides assailing extended period of limitation and penal provisions. 6. The learned Commissioner, CGST Commissionerate, Bolpur decided the case vide the impugned order date 28.05.2019 wherein he demanded duty of ₹ 15,43,94,279/- under section 11A(10) of the Central Excise Act , 1944 along with interest under section 11AA of the Central Excise Act, 1944. Penalty of ₹ 15,43,94,279/- was also imposed in terms of Rule 25 (1) of Central Excise Rules, 2002 read with section 11AC (1) ( c) of the Act. Being aggrieved, the appellant company has fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cale/other losses occurred during manufacturing of finished goods is not tenable. v) the Report No. PA 24 of 2009-10 of the Union Government (Indirect Taxes) at point 1.7.1.2: clearly mentions that as per norms fixed by M/s Steel Authority of India Ltd., the production of MS Bars/MS TMT Bar from billets and ingots should be 95% PMT of ingots/billets. All ISO licence holder companies have to observe these norms of production. vi) the appellant company had supplied finished goods i.e. MS Angles, MS Channels and MS Joists to M/s Steel Authority of India Ltd. observing the input-output ratio of 95% as revealed in their agreement with the SAIL; also the appellant had exported finished goods during relevant period, where they had to strictly follow the SION norms { as per proviso to condition 3 (d) of Notification No. 52/2003-Cus as amended by Notification No. 84/2007-Cus dated 06.07.2007 and 60/2008-Cus dated 05.05.2008}, where no standard inputoutput norms (SION) have been notified, the generation of waste, scrap and remnants up to 2% of the input quantity shall be allowed. vii) during the period 2012-13 to 2016-17, the appellant company had produced and delib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Adjudicating Authority had considered SION number C460 C514 in the impugned orders which is beyond the scope of show cause notice. The ld. Counsel further submitted that SION under Foreign Trade Policy exhibits average consumption of raw material for manufacture of finished goods. The SION varies from unit to unit; that it depends on number of factors viz nature of infrastructure installed; nature or quality of raw material used; expertise and technical efficiency of staff employed etc. The ld. Counsel stated that norms fixed under SION are not compatible for every industry of same product and same can be modified by the Norms Committee, DGFT New Delhi and referred to para 2.5 of Foreign Trade Policy 2014 and Aayaat Niryaat Form (ANF-4B) which is prescribed for fixation/ modification/ revision of SION. The ld. Counsel emphasized that there is no provision in the Central Excise Act, 1944 and Rules made hereunder to determine production based on SION and demand duty thereto. Regarding non applicability of SION for demand of duty under Central Excise Act, the ld. counsel stated that section 3 of Central Excise Act, the Charging Section, stipulates demand of duty on goods produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 25 of the Customs Act, 1962 (52 of 1962) and is an exemption notification. It does not prescribe any method/ procedure to determine quantum of production under Central Excise Act for demand of duty . Section 3 of the Central Excise Act being the charging section, stipulates that duty is to be charged on the goods produced or manufactured. We find that no physical verification of input consumption qua finished goods manufactured thereto was carried out by the department. The duty has been demanded on the basis of audit objection without causing any investigation. It is our considered view that the objection of audit cannot be the basis or reason to believe to further investigate the matter and cannot be the sole ground for holding clandestine manufacture and removal, in absence of any corroborative evidence. It is observed from records that neither investigation has been carried out from any buyer of finished goods nor from any transporter nor any flowback of funds was checked and neither any statement brought on record to substantiate clandestine removal without payment of duty. We find that no SION number was given in the show cause notice while learned Adjudicating Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice. In the present case, entire demand is based on the audit objection and is alleged to have been detected only after the audit was conducted and thus the appellant willfully suppressed the facts from the department. 19. We find that in Appeal No. E/77116/2019-DB the appellant is duly registered with the department and there is no allegation in the impugned order of non submission of any periodical returns. The appellant unit took central excise registration on 12.04.2007 and audit of department and by AG, West Bengal is being conducted as per details below :- Sl No. Audit conducted by Period of Audit Date of conducted Audit Remarks ..... X X X X Extracts X X X X X X X X Extracts X X X X
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