2018 (10) TMI 5 – CESTAT NEW DELHI – TMI – Clandestine manufacture and removal – M. S. Ingots – demand for duty raised on the basis of the input output norm declared by the appellant in their ER-5 returns – whether the demand raised thereby on the basis of arithmetical calculation can be sustained?
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Held that:- The allegation of clandestine clearance has been made by the Revenue authorities, but the same has not been supported by any documentary evidence. The entire demand has been worked out on the basis of presumption, taking into account the formula declared by the appellant – Clandestine clearance needs to be established on the basis of tangible documentary as well as oral evidence. In the present case, no such evidence has been brought on record by the Revenue.
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The Tribunal in the case of M/S EASTER (INDIA) CHEMICALS LTD. & RAJ TANDON VERSUS COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD [2017 (2) TMI 304 – CESTAT ALLAHABAD] has set aside the demand made only on the basis o
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, 2016, the appellant accounted for production of M. S. Ingots lesser than what would arise as per above formula by consumption of the scrap accounted by the appellant. The Department formula the opinion that the appellant had not accounted their production of final products in full and proceeded to demand differential Central Excise duty amounting to ₹ 15,86,161/- on the presumption of short accountal of production of 485.25 MT of M.S. Ingots. After issue of show cause notice, the Original Authority, vide his order dated 06.06.2017, confirmed the demand of duty but the Commissioner (Appeals), reduced such demand to ₹ 7,10,136/- by taking into account certain quantum of M.S. Scrap which was claimed by the appellant as cleared as such from the factory. The present appeal has been filed by the appellant challenging even the reduced demand for Central Excise duty. 3. Heard Shri Ajay Mishra, ld. Advocate for the appellant as well as Shri P. R. Gupta, ld. AR for the Revenue. 4.
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aside by the Tribunal. Finally, he submitted that the demand may be set aside. 5. Ld. AR justified the impugned order and submitted that the ratio of 1.1 MT of raw material for 1 MT of ingots has been declared by the appellant in his ER-5 returns and hence such a ratio is binding on the appellant. 6. Heard both sides and perused appeal record. 7. The dispute in the present case is regarding the demand for duty raised on the basis of the input output norm declared by the appellant in their ER-5 returns. The appellant has declared the ratio of raw materials required to be used in the manufacture of finished product as 1.1 MT of raw material will be required to produce 1 MT of finished products. By applying such calculation Revenue came to the conclusion that the appellant has failed to account the full quantum of goods manufactured by them. The differential duty as per the calculation has been raised alongwith interest and penalties. 8. The question which has to be decided is whether th
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erved that input/ output data in ER-5 return for the year 2007-08 is used to estimate quantum of goods manufactured in the year 2005-06. This estimated manufacture is not covered by any of the provisions of Central Excise Act or Rules made thereunder. The said Show Cause Notice has not invoked any enabling provisions which enables Revenue to use input/output data given in ER-5 return for charging Central Excise duty on estimated goods that should have been manufactured by the appellant. I, further find that Hon ble High Court of Allahabad has laid down the principle in the said case (supra) referred to above and relied upon by the ld. Counsel for the appellant. The principle laid down is that if the provisions of erstwhile Rule 173E of Central Excise Rules, 1944 are invoked then it was mandatorily required to fix norm for electricity consumption, notify them to manufacturers and thereafter ascertain reasons for deviations, and after taking into account the consumption of various inputs
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