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TMI Blog2023 (11) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... that the entire Show Cause Notice and impugned order has only emphasized on the alleged unaccounted scrap cleared by M/s Sujana to M/s Jaibhavani. After appreciating the facts we find that the Department has miserably failed to establish clandestine manufacture and clearance of finished products by M/s Jaibhavani during the disputed period, which is the basis for demand of duty, interest and penalties. The adjudicated authority has imposed penalty of Rs.5,50,000/- on the appellant. From the facts and evidences placed, there are no hesitation to conclude that the penalty imposed on the appellant is not justified and requires to be set aside. The impugned order is modified to the extent of setting aside the penalty imposed on the appellant - Appeal allowed. - HON BLE MRS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) And HON BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Shri G. Natarajan, Advocate for the Appellant Shri Anandalakshmi Ganeshram, Assistant Commissioner (A.R.) for the Respondent ORDER Order : [Per Ms. Sulekha Beevi C.S. ] Brief facts are that Show Cause Notice dated 28.06.1989 was issued to M/s Jaibhavani Steel Enterprise Ltd (hereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise Rules, 1944. 4 I confiscate land, building, plant and machinery of M/s Jai Bhavani Steel Enterprises situated at their factory at No.4/181, G.N.T. Road, Panjetty - 601 204, Ponnery Taluk, under Rule 173Q(2) of Central Excise Rules, 1944. However, 1 allow them the option to redeem the same on payment of a fine of Rs 2,50,000/- (Rupees Two Lakhs Fifty thousand only) in lieu of confiscation They are required to exercise this option within three months from the date of receipt of this order. 5. I impose a penalty of Rs 5,50,000/-(Rupees Five Lakhs fifty thousand only) on Shri Pramod Saraf, Chief Executive of M/s Jai Bhavani Steel Enterprises Ltd under Rule 209A of Central Excise Rules, 1944. 6. I also impose a penalty of Rs.3,00,000/- (Rupees Three Lakhs only) on Shri Ashok Saraf, Director of M/s Jai Bhavan! Steel Enterprises Ltd under Rule 209A of Central Excise Rules, 1944. 7. I refrain from imposing penalty under Section 11AC and demanding interest under Section 11AB of the Central Excise Act, 1944 against M/s Jai Bhavani Steel Enterprises Limited for reasons discussed already. 8. I impose a penalty of Rs 25,00,000/- (Rupees Twenty Five Lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 against M/s Jaibhavani was dropped. The Proceedings against under Rule 209 of Central Excise Rule 1944 M/s Sujana was kept in abeyance. 2.2 Against this order M/s Jaibhavani filed appeal before the Tribunal, and vide Final Order No. 657/2003 dated 22/08/2003 the Tribunal set aside the order and remanded for DENOVO adjudication. 2.3 In such DENOVO adjudication the adjudicating authority took up the proceedings against M/s Sujana also, and has passed this impugned order. 2.4 The allegation in the Show Cause Notice is that raw material (shredded MS Scrap) to the tune of 2405.820 MTs was procured by the main appellant (M/S Jaibhavani) from M/s Sujana Industries Ltd, without any documents. That M/s Jaibhavani has used such raw materials procured by them without documents to manufacture finished products viz; MS Ingots and cleared the finished products without payment of duty. 2.5 There is no evidence that appellant cleared finished products without payment of duty. The case emanates from the investigation initiated against M/s Metal Scrap Trading Corporation Ltd (hereafter referred to as M/s MSTC) who had imported shredded scrap availing benefit of concessional rate of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture and clearance of ingots. There is no evidence in the nature of excess consumption of electricity transportation documents, bank statements to prove manufacture and realisation of sale proceeds. There is absolutely no evidence adduced by department as to whom the appellant has clandestinely sold the final products. Apart from a case of procurement of raw materials from M/s Sujana, which was later regularized, there is no iota of evidence to allege clandestine manufacture and clearance. The Ld. Counsel prayed that the appeal may be allowed. 2.11 The Ld. Counsel. Submitted that earlier M/s Sujana had not furnished end use certificate. But later they furnished end use certificate for the entire quantity procured from M/s MSTC and got the procurement regularized. For this reason, the penalty imposed against M/s Sujana in the proceedings initiated against M/s MSTC was dropped. The Ld. Counsel adverted to the operative portion of the Order-in-Original No. 186/2001 dated 17.10.2001 wherein it is stated that the allegations and charges levelled against M/s Sujana scrap Limited, M/s Sujana Industries Ltd, are not maintainable. The proceeding against P. Mallikarjun Reddy, Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE SCNs issued, demanding ED on MS Ingots 8397.673 14 Total for which explanation given by Sujana (10)+ (12)+(13) 19303.078 15 Difference could not be reconciled by Sujana (9)-(14) 170.922 Para 40/Page 135 of Paper book Conclusions: (i) If the quantity of 2405.820 sold by Sujana to appellant allegedly without bills is comprised of under (11) above, the demand on appellant would not survive, as end use and subsequent clearance on payment of ED is proved. (ii) If the quantity of 2405.820 sold by Sujana to appellant allegedly without bills is comprised of under (12) above, the demand on appellant would not survive, as demands stand confirmed on MSTC on the ground of diversion and no use in melting. (iii) The quantity of 8397.673 for which CE demands have been issued, does not cover the appellant s case (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5,50,000/- imposed under 209A of CER, 2002. 9. The allegation against they main appellant M/s Jaibhavani is that the procured unaccounted raw material i.e. MS Scrap and used the same in the clandestine manufacture of MS Ingots. At the outset it has to be stated that the entire allegation as well as evidence put forward by the department is with regard to unaccounted raw material procured from M/s Sujana. We do not find any evidence as to the manufacture of MS Ingots using the alleged unaccounted raw material. There is no investigation or enquiry conducted as to whom M/s Jaibhavani has sold/supplied the MS Ingots clandestinely. The investigation carried out, statements recorded and documents relied upon are all in regard to the alleged procurement of raw materials from M/s Sujana. It is alleged vaguely in the Show Cause Notice that M/s Jaibhavani sold the MS Ingots without bills and collected cash. The demand is also quantified by assuming that M/s Jaibhavani would be able to use 85%(after loss of 15%) of the raw material of 2405.200 MTs procured from M/s Sujana and thus calculated the duty demand. There is not even a thin strand of evidence as to the alleged clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d use certificate dated 05.02.1999 is for quantity of 2920.030 MTs and end use certificate dated 14.02.2000 is for quantity of 670.400 MTs. However the said contention is not accepted by Department for the reason that the Ld. Counsel B. V. Kumar appearing for M/s Sujana stated that M/s Sujana sold 3871.320 MTs of Scrap to M/s Jaibhavani with proper bills. The demand raised is for the period from 26.02.1996 to 01.06.1996 and the end use certificate is issued for the period from 26.02.1996 to 02.08.1996. The adjudicating authority observes that this period is two months longer that the demand period and that the quantity shown in the end use certificate is less than the quantity claimed to have been sold by M/s Sujana as represented by counsel. Thus adjudicating authority refused to accept the end use certificate issued to M/s Jaibhavani for 3590.430 MTs even though the allegation in the Show Cause Notice is only for the quantity of unaccounted Scrap of 2405.200 MTs. Here again, we have to emphasize that the whole effort of adjudication has been to reconcile the purchase of raw material by M/s Jaibhavani from M/s Sujana. There is no discussion as to the sale of finished product, viz; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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