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TMI Blog2004 (12) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants in the ordinary course of their business were put to scrutiny. 3. On the basis of the result of the above investigation, show cause notice dated 1-9-98 was issued to the appellants raising the following demands of duty against them :- (a) Duty of Rs. 1350/- involved as additional duty on 1.5 MT of scrap loaded in the intercepted truck. (b) Duty of Rs. 6.75 lakhs on the clearances of unaccounted scrap during the period 1996-97 and 97-98 on the ground that the invisible loss declared by the appellants was on the higher side. (c) Duty of Rs. 1.46 lakhs was demanded on the charge of under-valuation of scrap cleared by the assessee. (d) Duty of Rs. 14.62 lakhs was proposed to be confirmed for the period January, 95 to July, 97 on the charge of removal of bearing rings under the guise of scrap at reduced rate. (e) An amount of Rs. 97.47 lakhs representing the Modvat credit availed on steel inputs for the period August, 93 to March, 98 was sought to be denied to the appellants on the allegations that quantum of visible/invisible losses availed by them was on the higher side and the quantity of steel inputs representing the same was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty of Rs. 90,47,700/- the appellants clarified that the entire case of the revenue is based upon the higher percentage of invisible loss. They clarified that the total loss in their case is about 8% out of which 3% is burning loss up to forging stage, another 3% as burning loss in heat treatment and 1% loss each in grinding and shot blasting process. They also referred to one of the cases, where the department has accepted emergence of 11% visible loss. 8. The above submissions made by the appellants were not accepted by the Commissioner, who vide his impugned order confirmed the demand of duty as proposed in the show cause notice. In addition, the seized scrap was confiscated along with the confiscation of truck with an option to the appellants to redeem the same on payment of redemption fine of Rs. 10,000/- and Rs. 15,000/- respectively. Penalty of Rs. 80,36,345/- was imposed upon the appellants under the provisions of Rule 173Q read with Section 11AC. Land, plant and machinery, building were also confiscated with an option to redeem the same on payment of redemption fine of Rs. 1 lakh. In addition, personal penalty of Rs. 1 lakh was, imposed on Shri A.K. Mitra, Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department to prove by production of sufficient and tangible evidence. In the instant case, there is no evidence at all on record to reflect upon the clandestine activity on the part of the appellants. We, accordingly, set aside the said demand of duty against the appellants. 12. As regards the findings of the under-valuation of scrap dealt in para 35 of the impugned order, it is seen that the Commissioner has given adverse findings against the appellants on the ground that the price of the scrap in the market was on the higher side and many parties were ready to offer higher price then adopted by the appellants. Reference has also been made to some of the documents quoting the rate at the higher price but there is no evidence to show that the scrap has actually been cleared at higher price. As such, we extend the benefit of doubt to the appellants and drop the said demand against them. 13. As regards clearance of bearing rings under the guise of scrap, the appellants have explained that it was rejected and damaged rings received back by them from their customers which were sold at much reduced price. The Commissioner has referred to a letter written by M/s. Jay Engineering ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 35 years and they manufacture about 700-800 varieties of forgings required for automobile and mechanical industries. They purchase raw material directly from the manufactures and supply forged products mainly to original equipment manufacturers. The raw material are supplied by M/s. Ispat Profiles, M/s. Kalyani Steels, etc. and at the point of supply itself, the supplier furnish test report containing grade, chemical/mechanical properties. The clients specify the grade and material to be used of each product. Each grade contains composition of all the properties of various ranges. In respect of manufacturers of forgings, raw material is accounted at the point of receipt in terms of actual quantity of each grade whereas once it is taken for processing the forged products are accounted in terms of numbers of specified shapes and dimensions. It has been contended by the assessee that it is not the normal practice to weigh each item of forged product as there would be some marginal difference during the course of forging and, therefore, in the information submitted to the Central Excise Department, the weight of the forged products recorded is only a notional weight and not actual we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d invisible loss 8% to 10%, thus making the total loss in the range of 12% to 15%. One of the dispute raised in this show cause notice is relating to percentage of visible and invisible loss and non-accounted of the raw material brought in for forging fully. The department contended that the entire quantity of raw material brought in have not been properly accounted for in terms of the finished products, physical scrap and losses and, therefore, the assessee is not liable for the entire Modvat credit utilised by them. In the forging industry, the following are treated as visible losses i.e. cutting, rejection of job at any stage, die forging in hammer or press, piercing and trimming and matching. The invisible losses are burning at forging stage, heat treatment, shot blasting and grinding." 15. The above stand of the appellants has not been accepted by the Commissioner on the ground that they have been changing their stand inasmuch as in one of the letter written by them to the department they have shown less invisible loss. He has made his own analysis and has come to a finding that the loss cannot exceed 5.74% whereas in the appellant's case, it varies from 5.3% to 10%. 16. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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