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TMI Blog2024 (8) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... nsportation and/or seizure of any unaccounted raw material in the unit of the Appellant or during its transportation, payment trail for unaccounted raw material. No suppliers of unaccounted raw material have been identified. There was no discrepancy in stock of finished goods at the time of visit of the Officers. No finished goods were seized during their unaccounted removal. No purchasers of allegedly clandestinely cleared finished goods have been identified. No unaccounted cash has been recovered from the premises of the two units of the Appellant or from residence of Directors. Thus, allegation of clandestine removal is only on the basis of electricity consumption. In the case of COMMISSIONER OF C. EX., MEERUT-I VERSUS RA CASTINGS PVT. LTD. [ 2010 (9) TMI 669 - ALLAHABAD HIGH COURT] , Hon ble Allahabad High Court, while upholding the order of the Tribunal RA CASTINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-I [ 2008 (6) TMI 197 - CESTAT NEW DELHI] held that mere electricity consumption cannot be the sole basis for determining duty liability. The demand raised on the basis of electricity consumption is not sustainable and is set aside. Equivalent penalty on this ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised on the allegation that waste scrap shown to have been received by the Appellant from its sister concern Kunj Forgings Pvt. Ltd. were actually not received but were paper transactions only. Appeal disposed off. - ( P. K. CHOUDHARY ) MEMBER ( JUDICIAL ) And ( SANJIV SRIVASTAVA ) MEMBER ( TECHNICAL ) Shri Kamaljeet Singh , Advocate for the Appellant Shri Manish Raj , Authorized Representative for the Respondent ORDER P. K. CHOUDHARY : The present appeal has been filed by the Appellants assailing the impugned Order-in-Original No.12/COMMR./GZB/2011-12 dated 29.03.2012 passed by the Commissioner of Customs, Central Excise Service Tax, Ghaziabad confirming demand of Central Excise duty of Rs.2,19,91,916/- (inclusive of education cess) and Cenvat credit of Rs.63,45,801/- (inclusive of education cess). Penalty, equal to the total confirmed demand of Rs.2,83,37,717/- has also been imposed. Shri Nitin Agarwal, Director has come up in appeal against penalty of Rs.30,00,000/- imposed on him. 2. Briefly stated, the facts of the case are that Appellant has two units. Its unit-I is engaged in manufacture and clearance of flanges of Carbon Steel, Stainless Steel and Alloy Steel falling und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB of the Central Excise Act, 1944 was sought be demanded. Penalty was sought to be imposed on the Appellant under Rule 25 of the Central Excise Rules, 2002, Rule 15(2) of the CCR, 2004 and Section 11AC of the Central Excise Act, 1944. Personal penalty was also sought to be imposed on Shri Nitin Agarwal, Director of the Appellant. 3. The SCN was adjudicated and the impugned Order-in- Original was passed by the ld. Commissioner of Central Excise, Ghaziabad who confirmed the demand of Central Excise duty and Cenvat Credit with applicable interest and imposed equivalent penalty on the Appellant. Personal penalty of Rs.30,00,000/- has been imposed on the Director Shri Nitin Agarwal. 4. Shri Kamal Jeet Singh, Advocate appeared on behalf of the two Appellants viz. Shyam Forgings Pvt. Ltd. and Shri Nitin Agarwal. The ld. Counsel informed that on the basis of the same investigation and the same evidence and statements of the same witness, a separate SCN was issued to KFPL which was adjudicated by Order-in-Original No.61/COMMISSIONER/GZB/2009 dated 24.12.2009. In appeal before the Tribunal, the said Order-in-Original in case of KFPL was set aside. 5. Period of demand in the present case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 237) E.L.T. 674 (Tri-Delhi) Upheld in 2011 (269) E.L.T. 337 (Allahabad) Upheld in 2011 (269) E.L.T. A108 (SC). Commr. of C.Ex., Meerut-I Vs. R.A. Castings Pvt. Ltd. 2011 (269) E.L.T. 337 (All.). Survarna Alloys Steels P. Ltd. Vs. CCE (4) E.L.T. 248 (Tri-Bang.). 5.6 That there is no corroborative evidence of procurement of raw material, utilization of labour, capacity of furnace, clandestine removal of finished goods, transportation of finished goods cleared clandestinely, octroi receipts, weighment slips, bilties, receipt of consideration etc. to sustain allegation of clandestine manufacture. Allegation is based solely on electricity consumption which is not sustainable. He relied upon the following judgment :- CCE, Raipur Vs. J.J. Re-Rollers 2017 (348) E.L.T. 99 (Tri. Delhi). 5.7 That the allegation/ finding that the capacity of the furnace installed in the unit of the Appellant is more than 7 M.T. is not correct. The invoice of furnace manufacturer, M/s. Inductotherm (India) Pvt. Ltd., shows capacity of the furnace as 5 MT. The electricity load of the Appellant sanctioned by the Managing Director, Paschimanchal Vidyut Vitran Nigam Ltd. is also for a 5 M.T. Induction Furnace only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are re- used captively in the manufacturing process as these are nothing but scrap. 5.14 That the allegation that Appellant has cleared runners and risers without payment of Central Excise duty is without any basis. The quantity of runners risers allegedly manufactured and cleared without payment of excise duty is based on the allegation of excess electricity consumption. Demand on the basis of excess consumption of electricity is not sustainable. No evidence has been adduced by the Department to substantiate the allegation that runners and risers were removed from the unit by the Appellant. Secondly, the Appellant also purchases scrap from outside so it does not stand to reason that the Appellant would not re-use scrap generated in its own unit. 5.15 That where goods produced in a unit are consumed captively, duty of excise is not leviable in terms of the provisions of Notification No.67/95-CE dated 17.03.1995. Hence demand of duty in respect of runners and risers is not sustainable. 5.16 That Cenvat credit of Rs.63,45,801/- has wrongly been denied to the Appellant. The demand is based on the allegation that M/s KFPL has only issued invoices to the Appellant without actual move ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w material, actual removal of clandestine goods, receipt of sale proceeds etc. is not produced. In the case of Nova Petrochemicals Vs. CCE, Ahmedabad reported in 2014 (311) E.L.T. 529 (Tri-Ahmd.), the Tribunal has laid down the fundamental criteria which must be established by Department to prove clandestine manufacture. Ld. Counsel contended that this criteria has not been met in the present case. That penalty is not imposable on the Appellant in the facts and circumstances of the present case as the demand of duty and Cenvat credit itself is not sustainable, being based on conjectures and surmises. 8. The ld. Departmental Representative reiterated the findings given by the Adjudicating Authority and submitted that the Order-in-Original was proper, legal and maintainable. 9. Heard both sides and perused the appeal records and the case laws cited by the ld. Counsel for the Appellants. 10. Para 50 of the impugned OIO contains a chart showing details of how demand of duty and Cenvat credit has been calculated. The demand at Sr. No.1, 3 and 5 is on the basis of electricity consumption. The demand at Sr. No.2 and 4 is for M.S. Ingots which has been calculated on the basis of ledger pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court reads :- 3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise Service Tax Appellate Tribunal, New Delhi. The Tribunal observed that it is settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on MT of steel ingots. Tribunal also observed that the electricity consumption varies from one heat to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e table for quantification of total demand, the demand in respect of risers and runners is shown at Sr. No.6, 7 and 8 of this table. The three financial years for which demand has been raised are 2004-05, 2005-06 and 2006-07. The demand of risers and runners has also been raised on the basis of electricity consumption per unit. This issue has already been discussed in detail in preceding paras. Accordingly, we set arise the demand of Central Excise duty of Rs.4,13,177/- and education cess of Rs.8,264/- in respect of risers and runners. Equivalent penalty of Rs.4,21,441/- is also set aside. 16. The demand at Sr. No.8 is on the basis of shortage in quantity of raw material noticed at the time of search. This shortage was admitted by Shri Nitin Agarwal at the time of search that scrap was removed the previous day without payment of duty and without issuing invoice as the concerned person who was engaged in preparation of invoice left early. However, in their defense reply and in the appeal memorandum, the Appellant have contended that there was no shortage in stocks of M.S. Scrap and officers have not carried out any weighment. There is no record in panchnama of any weighment having b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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