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TMI Blog2004 (3) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... lled re-rolling or forging machinery for manufacture of billets, the finding of the Commissioner on this aspect cannot be faulted and we accordingly uphold the same and reject Appeal. In the absence of any charge or finding of use of any other source of power, allegation of suppression of production cannot be sustained. We also note that even applying the formula of 90% yield, the ingots generated will only be 2655.800 out of 2950.893 MTs of unaccounted scrap, while the Revenue has alleged that 4979.31 MTs of ingots have been clandestinely produced. Similarly, the total plant returns for the disputed period is 6142.730 MTS and not 4612.148 MTs as held by the authorities below. Central Excise authorities have ignored the figures of certain plant returns such as, short ingots, yard cleaning etc., which do not figure in the production register, as they emerge during further processing of the goods, and therefore, figure only in the plant return register and the plant returns have been confined only to such plant returns, which emerge at the production stage and figuring in the production register only, which is not correct. In the light of the above, we hold that the department has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gots and MS Runner and MS Risers cleared without payment of duty, proposing disallowing of Modvat Credit of Rs. 1,00,00,26,360 taken on MS billets and also in respect of scrap not received, proposing confiscation of seized billets and proposing imposition of penalty on the company as well as on the Managing Directors, Manager and Assistant of the company, and the driver of the lorry intercepted on 3-3-1993. The Commissioner of Central Excise dropped the charge of irregular availment of Modvat credit utilised for manufacture of MS billets (Rs. 93,26,613) but disallowed Modvat Credit of Rs. 3,11,256 on scrap short received and scrap removed without credit reversal, (the Revenue has filed Appeal No. E/1082/1996 against the dropping of the charge covering the amount of Rs. 93,26,613/-) confirmed the duty demand as raised, confiscated the billets seized on 3-3-1993 and appropriated the security amount of Rs. 30,000/- towards the value of the billets which had been released provisionally on execution of a bond, confiscated lorry carrying the billets and also imposed penalty of the following amounts on the following persons: - Heat No. Charge Burning loss Plant returns Ingots 1 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been 85,117.679 MTs (90% of 94575.199 MTs of scrap), while, only 80,138.364 MTs of ingots have been accounted for by the appellants; hence, duty is payable on the balance quantity of 4,979.315 MTs clandestinely removed. This inference has been drawn on the basis of production registers maintained by the appellants. This register reflects the total quantity of the scrap charged, which includes quantities of re-cycled scrap, which has admittedly gone into the production of MS ingots and consumed along with virgin scrap. The submission of the assessee is that MS scrap, which is the raw material, is put into the electric arc furnace and after melting and casting, final product emerges. Normally, the desired yield will be in the range of 90-92% under ideal conditions and there will be a burning loss of 8-10%. During the process of melting, certain quantities would emerge in every heat as plant returns in the form of runners, risers, the excess melts, short ingots, plant returns, skulls etc. The conversion of scrap into ingots does not take place in one cycle of production and a certain quantity of the virgin scrap at the introductory stage would emerge as plant return in every heat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into account. 8. Plant returns will figure as a percentage of the finished goods against raw material fed into the furnace and they will also become raw materials once they are taken out of the stock for re-cycling into the furnace and consequentially, plant return has to be accounted separately in terms of its production as finished goods and separately for the quantity, which is re-cycled. We agree with the appellants that the basis adopted by the Commissioner is erroneous and it is this error that has resulted in his arriving at the quantity of clandestine clearance. 9. There are additional reasons as to why the quantity alleged to have been produced clandestinely could not have been produced. One of such reasons is that the total available down-time (per cycle of production) divided by number of heats will give the average time per heat, which during the disputed period works out to 2.84. These figures have been taken from the production register, which is a reliable document and going by these figures there would be no time available to produce the alleged quantity cleared clandestinely. Yet another reason is that the average consumption of electricity PMT of ingot dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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