Custom, Excise & Service Tax Tribunal
Phil Ispat Private Limited vs Raipur on 13 November, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, WEST BLOCK No.2, R.K. PURAM,
NEW DELHI-110 006
Date of Hearing: 30/08/2018
Date of Pronouncement: 13/11/2018
Date of
S. Impugned
Case No Impugned Passed By Appellants Respondent
No. Order Detail's
Order
COMMISSIONER
PHIL ISPAT PRIVATE
OIA-RPR-EXCUS- OF CGST &
E/50964/2018- LIMITED C.C.E. &
000-COM-90-94- 28/12/2017 CENTRAL
1. DB S.T.-RAIPUR
17-18 EXCISE-RAIPUR(
(PIPL)
Appeal)
COMMISSIONER AIRAN STEEL &
OIO-RPR-EXCUS- OF CGST & POWER PRIVATE
E/50965/2018- C.C.E. &
2. 000-COM-090- 28/12/2017 CENTRAL LIMITED
DB S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR(
Appeal) (ASPPL)
COMMISSIONER
OIA-RPR-EXCUS- OF CGST & SHRI N K BHOJANI,
E/50968/2018- C.C.E. &
3. 000-COM-090- 28/12/2017 CENTRAL Dir.of M/s Phil Ispat
DB S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR( Pvt Ltd.
Appeal)
COMMISSIONER
SHRI MANOJ SHARMA,
OIA-RPR-EXCUS- OF CGST &
E/50969/2018- General C.C.E. &
4. 000-COM-090- 28/12/2017 CENTRAL
DB Manager(Commercial), S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR(
M/s Phil Ispat
Appeal)
COMMISSIONER AIRAN STEEL &
OIO-RPR-EXCUS- OF CGST & POWER PRIVATE
E/50970/2018- C.C.E. &
5. 000-COM-090- 28/12/2017 CENTRAL LIMITED
DB S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR(
Appeal) (ASPPL)
COMMISSIONER
OIO-RPR-EXCUS- OF CGST &
E/50971/2018- ARORA (CG) ENERGY C.C.E. &
6. 000-COM-090- 28/12/2017 CENTRAL
DB AND STEEL P LTD S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR(
Appeal)
COMMISSIONER RADHA MADHAV
OIO-RPR-EXCUS-
E/50977/2018- OF CGST & INDUSTRIES PVT LTD C.C.E. &
7. 000-COM-090- 28/12/2017
DB CENTRAL S.T.-RAIPUR
094-17-18
EXCISE-RAIPUR (RMIPL)
COMMISSIONER
KALINDI ISPAT PVT
OIA-RPR-EXCUS- OF CGST &
E/50978/2018- LTD C.C.E. &
8. 000-COM-090- 28/12/2017 CENTRAL
DB S.T.-RAIPUR
094-17-18 EXCISE-RAIPUR(
(KIPL)
Appeal)
COMMISSIONER MANGAL SPONGE &
OIO-RPR-EXCUS-
E/51811/2018- OF CGST & STEEL PVT LTD C.C.E. &
9. 000-COM-047- 27/03/2018
DB CENTRAL S.T.-RAIPUR
2018
EXCISE-RAIPUR (MSSPL)
E/52248/2018- COMMISSIONER SHRI RUPESH C.C.E. &
10. OIA-RPR-EXCUS- 18/01/2018
DB OF CGST & AGRAWAL,Authorized S.T.-RAIPUR
000-COM-090-
CENTRAL Signatory of M/s Satya
2
Appeal No.E/50964/2018 & 12 others
094-17-18 EXCISE-RAIPUR( Power Ltd.
Appeal)
Commissioner of SATYA POWER &
OIA-RPR-EXCUS-
E / 51972/ 2018- Central Excise ISPAT LTD C.C.E. &
11. 000-COM-090- 20/04/2018
DB and Service Tax- S.T.-RAIPUR
094-2017
RAIPUR( Appeal) (SPIL)
COMMISSIONER
OIA-RPR-EXCUS- OF CGST & SHRI ANAND
E / 52228 / C.C.E. &
12. 000-COM-090- 18/01/2018 CENTRAL SINGHANIA, Dir.of
2018-DB S.T.-RAIPUR
094-2017 EXCISE-RAIPUR( Kalindi Ispat Pvt Ltd.
Appeal)
COMMISSIONER
SHRI AKHILESH
OIO-RPR-EXCUS- OF CGST &
E / 52229 / SINGHANIA, Dir. of C.C.E. &
13. 000-COM-090- 28/12/2017 CENTRAL
2018-DB M/s Kalindi Ispat Pvt S.T.-RAIPUR
094-2017 EXCISE-RAIPUR(
Ltd.
Appeal)
Appearance
Shri K. Kurmy, K.K. Anand, A.K. Mishra, Ajay Sharma, Abhas Mishra, Advocates....
.................. for the appellants Shri R.K.Mishra, H.C.Saini, DR ...................for the respondent CORAM: HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR.BIJAY KUMAR, MEMBER (TECHNICAL) Final Order No.53264-53276/2018 Per: Bijay Kumar
1. All these have been filed by the respective Appellants along with their officials such as Directors, Authorized signatory and General Manager. The six main Appellants are manufacturers.
2. All the six manufacturers are engaged in the manufacture of Sponge Iron for which Iron Ore is the principal raw material. Apart from Iron Ore, Coal and Dolomite are other important raw materials which are used in the manufacture of Sponge Iron.
3. Also during the material period the Iron Ore was transported from various Iron Ore mines situated in Orissa to the Railway siding at Uslapur, Bilaspur (C.G) through Rakes. The said Iron Ore was unloaded at Uslapur Railway siding and further transported to the factory premises of five out of aforementioned six manufacturers 3 Appeal No.E/50964/2018 & 12 others of Sponge Iron by one M/s. Gyan Singh a transporter of Bilaspur. In the case of M/s. MSSPL, the said transportation was undertaken by one M/s. Amit Roadlines, Bilaspur
4. It is the case of the Revenue that apart from the Iron Ore which was being reflected in the statutory records by six manufacturers and utilized in the manufacture of Sponge Iron, they were also procuring huge quantity of Iron Ore from Railway Siding at Uslapur which was not reflected in their statutory records and which was being used in the manufacture of Sponge Iron which was clandestinely removed. It is their case that apart from the accounted Iron Ore, M/s. Gyan Singh was also transporting unaccounted Iron Ore to the units of five units out of six units. Similar view was entertained in respect of M/s. Amit Roadlines which was transporting Iron Ore on behalf of M/s. MSSPL.
5. The Central Excise officers searched the office premises of M/s. Gyan Singh, Bilaspur on 21-6-2007 and seized some incriminating documents/records related to the transportation of Iron Ore from Uslapur Railway siding to various factories of Sponge Iron manufacturers. As per the said Panchnama as the number of records which were seized being high hence there records were kept in two bags which were sealed and subsequently vide two panchnamas details of the seized records were prepared which were 70 in number.
6. A statement of Shri Dilip Kumar Markam, Accountant of M/s. Gyan Singh was recorded on 22-6-2007 wherein, he inter alia, deposed that the documents which were prepared for transportation of Iron Ore from Railway siding Uslapur to respective factories were loading slips and challans in duplicates, and were handed over to truck driver at Railway siding. He stated that after unloading of Iron Ore in the factory, the truck drivers handed over one copy of loading slip, one Challan and the weighment slip, on the basis of which the truck operators claimed charges from the assesses/appellants. Based on these documents only M/s. Gyan Singh and the appellants reconciled the total transportation of Iron Ore to the factories and 4 Appeal No.E/50964/2018 & 12 others accordingly M/s. Gyan Singh received payments from the assesses/appellant. He added that the transportation cost included payments made to labour contractors at Railway siding rent for J.C.B. machines, loaders and freight charges of trucks.
7. Another statement of Shri Dilip Kumar Markam, Accountant of M/s. Shri Gyan Singh was recorded on 16-7-2007 wherein he, inter alia, stated that the rake wise transportation of Iron Ore was entered up to 21-6-2007. He added that the quantity of Iron Ore received in the factories of the appellants were recorded as per telephonic information received from them. In case of any discrepancy, remark was put in the record for purpose of payment of freight. He admitted that as on 16-07- 2007, they had received all payments from Sponge Iron Manufacturers/Appellants to whom they had transported the Iron Ore either by cheque or in cash. He clarified that in some cases where transportation bills were not issued by the appellant/assesses, the freight charges were received in cash only. He also admitted that sometimes the bills were raised for lesser quantity than actual quantity received as per requirement of the assesses but amount was paid for actual quantity transported by them. He also elaborated and explained the purpose of maintaining of each record.
8. The premises of M/s. Amit Roadlines was also searched on 21-6-2007 and records were withdrawn as per four panchnamas dated 21-6-2007, 4-7-2007, 6-7-2007 and 20-11-2007. Statements of Shri Ajay Chobay, Manager M/s. Amit Roadlines were recorded on 21-6-2007, 8-8-2007 and 20-11-2007 wherein he explained the purport of the various records seized from their premises.
9. The South East Central Railway Authority vide their letter dated 05-03-2008 had informed that the manufacturers of Sponge Iron including the present six manufacturers had got transported Iron Ore by railway rakes and had taken delivery of the same from the Railway Siding at Uslapur, Bilaspur. The Railway Authorities provided the details regarding Iron Ore transported through Rail Rakes from various 5 Appeal No.E/50964/2018 & 12 others mines to Railway Siding at Uslapur along with RR (Railway Receipt) Number and date, name of consignor and consignee of Iron Ore and the identity of the party who had lifted the said material. The details of the parties to whom the Railway Receipts endorsed against the receipts of Iron were also given. A perusal of the same would reveal that the Railway had given information about 156 consignments which arrived at Uslapur Railway Siding during the period 3rd April 2006 to 28th June, 2007. However, in the case of M/s. SPIPL identical chart was prepared by the department and it was relied upon RUD.
10. That, the statements of Directors and the authorised signatory of the six manufacturers, hereinabove, who are the Appellants in these cases were recorded wherein they explained the procedure for placing orders of Iron Ore. The text of all these statements is almost similar. It was stated that it was possible that the consignee is one and the actual lifter is another one, but in that case RR needs to be endorsed by the consignee to the lifter. On the basis of aforesaid endorsements, railways let the lifter (other than consignee/owner of the goods) lift the iron ore from the Railway Siding at Uslapur, Bilaspur. On the issue of consumption of electricity and yield of Iron Ore for manufacturing of Sponge Iron, various parameters were given but it was categorically stated that conversion rate depends on various factors namely coal and Iron Ore quality. Sh. Rupesh Agarwal, Authorised Signatory, of M/s. SPIPL in his statement dated 19-12-2008 stated that it takes 1.6 to 2 MT iron ore for making 1 MT of sponge Iron. Similarly, Sh. Rajinder Kumar Agarwal, Director of M/s. RMIPL in his statement dated 22-12-2008 stated that in ideal condition and as per the literature of Sponge Iron manufacture, 1.75 MT of Iron Ore is required for manufacturing 1 MT of Sponge Iron. He further stated that this ideal condition never prevailed in their factory due to poor quality of Iron Ore, poor quality of coal and inexperienced technical staff.
11. However, the show cause notice were issued to all the six manufacturers wherein it was alleged that they had received excess quantity of Iron Ore on the basis of 6 Appeal No.E/50964/2018 & 12 others information provided by the Railways and also on the basis of records seized from M/s Gyan Singh in respect of five manufacturers and in respect of M/s. SPIPL by M/s.Amit Roadlines. The department by adopting the formula of input output ratio that 1.6 MT of Iron Ore could manufacture 1 MT of Sponge Iron demanded duty on Sponge Iron. The details of unaccounted quantity of Iron Ore allegedly received by all the six manufacturers and quantity of Sponge Iron allegedly manufactured out of the same can be summarized in the following chart:-
No. Name of Quantity allegedly Quantity Total Quantity of the received as per the allegedly Quantity of Sponge Iron Appellant information provided received on the Iron Ore allegedly by the Railways basis of the manufactured records seized out of the said from M/s Gyan quantity of Singh Iron Ore
(i) SPIPL 22015.00 MT 21128.99 MT 43144.19 MT 26965.119 MT
(ii) KIPL 17431.46 MT 22745.39 MT 40176.85 MT 25111.00 MT
(iii) RMIPL 15440.97 MT. Apart 24632.48 MT 43198.92 MT 26411.98 MT from the above quantity there is an allegation that 1200 MT was received on the basis of statement of Shri Manoj Jain dated 30.12.2008 Director of M/s Airen Steel (P) Ltd.,
(iv) ASPPL 11428.980 MT 3775.880 MT 15204.680 MT 9503MT
(v) PIPL 6484.390 MT 3400.100 MT 9884.540 MT 6178 MT
(vi) MSSPL 16863.64 MT -- 16863.64 MT 10540 MT 11.1 In respect of M/s. KIPL and M/s. ASPPL further duty was also demanded on the basis of higher consumption of electricity and low yield of Sponge Iron from Iron Ore. There is also a demand against M/s. PIPL with regard to a quantity of 1307.26 MT of Sponge Iron on the basis of which certain private records, gate passes and parallel invoices relating to the period March 2007 to July 2009.
12. All the matters were adjudicated by the Commissioner of Central Excise, Raipur vide different Orders-in-Originals. All the matters came up before the Tribunal. All the 7 Appeal No.E/50964/2018 & 12 others appeals were remanded back to the Commissioner for de novo adjudication on the ground of violation of principles of natural justice. In one of the remand order in the case of M/s. Airan Steel & Power Pvt. Ltd. the Tribunal vide Final Order No. A/50955-50956/2014-EX[DB] dated 07-03-2014 held that since the same railway rack numbers are also the subject matter of the Show Cause Notice issued to the other manufacturers, it was therefore directed that it would be in the interest of justice and fair play that all the Show Cause Notices, which fall under the jurisdiction of the same Commissioner are taken up for adjudication by a common order. It is due to the above Final Order that five out of the six matters were taken up together and one common adjudication order has been passed. In some of the remand orders directions were also given to allow cross examination of the witnesses on whose statements reliance was placed.
13. That, during the remand proceedings dates for cross examination of Sh. Dilip Kumar Markam were fixed on different dates. However the Principal Commissioner in para 19.1 of his Order has observed that Sh. Dilip Kumar Markam died in road accident two years back. However, the cross examination of M/s. Gyan Singh and Sh. Manoj Agarwal, Director of M/s. ASPPL was conducted by M/s. RMIPL.
14. The Principal Commissioner has passed one common Order in respect of five manufacturers. In respect of M/s. MSSPL a different Adjudication Order has been passed. That, apart from confirming the duty demand under the Central Excise Act, demands have also been confirmed under proviso to Section 73 of the Finance Act, 1944 against the liability of Service Tax on transport of goods by road service on transportation expenses of Iron Ore, which according to him the receipt, which was suppressed and the same has been ordered to be recovered. Penalties under different Sections of Finance Act have also been imposed. Wherever the demand under the Finance Act, 1994 has been confirmed and challenged in these appeals, the same is being indicated in the charts of duty demand. The confirmation of duty 8 Appeal No.E/50964/2018 & 12 others demand under the Central Excise Act and Finance Act (in whichever appeal it has been demanded and challenged) is tabulated below:
(i) Details of duty demanded confirmed and penalties imposed in respect of M/s. PIPL.
Duty amount confirmed under Section Rs.1,22,65,337/-
Under section 11A of the CE Act, 1944 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs.1,22,65,337/-
Under section 11Ac of the CE, Act 1944 Section 11AC of the Central Excise Act, 1944 Amount of penalty imposed on the Rs. 25,00,000/-
Shri N. K. Bhojani, Director under Rule 26 of the Central Excise Rules, 2002 Amount of penalty imposed on the Rs. 15,00,000/-
Shri Manoj Sharma, G.M (Commercial) under Rule 26 of the Central Excise Rules, 2002 Amount of penalty imposed on the Rs. 10,00,000/-
M/s. Arora (CG) Energy and Steels Pvt. Ltd., Director under Rule 26 of the Central Excise Rules, 2002
(ii) Details of duty demanded confirmed and penalties imposed in respect of M/s. ASPPL.
Duty amount confirmed under Section Rs. 4,43,48,360/- Under section 11A of the CE Act, 1944 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs.4,43,48,360/- under section 11AC of CE Section 11AC of the Central Excise Act, 1944.
Act, 1944
(iii) Details of duty demanded confirmed and penalties imposed in respect of M/s. RMIPL.
9
Appeal No.E/50964/2018 & 12 others Duty amount confirmed under Section Rs.4,49,89,235/- 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs.4,49,89,235/-
Section 11AC of the Central Excise Act, 1944 Amount of Service Tax confirmed Rs.1,40,846/-
under Section 73(1) of the Finance Act,1994.
Amount of penalty imposed under Rs. 1,40,846/-
Section 78 of the Finance Act, 1994 Amount of penalty imposed @ @ Rs.200/-
Rs.200/- every day under Section 76 of the Finance Act, 1994.
Amount of penalty imposed under Rs.5,000/-
Section 77 of the Finance Act, 1994
(iv) Details of duty demanded confirmed and penalties imposed in respect of M/s. KIPL.
Duty amount confirmed under Section Rs.9,97,91,551/- 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs. 9,97,91,551/-
Section 11AC of the Central Excise Act, 1944 Amount of Service Tax confirmed Rs.1,23,047/-
under Section 73(1) of the Finance Act,1994.
Amount of penalty imposed under Rs. 1,23,047/-
Section 78 of the Finance Act, 1994 Amount of penalty imposed @ @ Rs.200/-
Rs.200/- every day under Section 76 of the Finance Act, 1994.
Amount of penalty imposed under Rs.5,000/-
Section 77 of the Finance Act, 1994 Amount of penalty imposed on the Rs.2,00,00,000/-
Shri Akhilesh Singhania, Director under Rule 26 of the Central Excise 10 Appeal No.E/50964/2018 & 12 others Rules, 2002 Amount of penalty imposed on the Rs.2,00,00,000/-
Shri Anand Sanghania, Director
under Rule 26 of the Central Excise
Rules, 2002
(v) Details of duty demanded confirmed and penalties imposed in respect of M/s.
MSSPL.
Duty amount confirmed under Section Rs. 1,51,20,333/- 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs. 1,51,20,333/-
Section 11AC of the Central Excise Act, 1944
(vi) Details of duty demanded confirmed and penalties imposed in respect of M/s.
SPIPL.
Duty amount confirmed under Section Rs.4,36,94,231/- 11A(1) of the Central Excise Act, 1944 Amount of Penalty imposed under Rs.4,36,94,231/-
Section 11AC of the Central Excise Act, 1944 Amount of Service Tax confirmed Rs.59,464/-
under Section 73 of the Finance Act 1994 along with interest under Section 75 of the Finance Act, 1994.
Amount of penalty imposed under Rs.59,464/-
Section 78 of the Finance Act, 1994 Amount of penalty imposed @ @ Rs.200/- per month Rs.200/- per month under Section 76 of the Finance Act, 1994.
Amount of penalty imposed on the Rs.1,00,00,000/-
Director under Rule 26 of the Central 11 Appeal No.E/50964/2018 & 12 others Excise Rules, 2002.
15. SUBMISSIONS BY M/S. SPIPL, M/S. KIPL, M/S. RMIPL AND THEIR AUTHORISED SIGNATORY, DIRECTORS.
(i) That, a preliminary objection has been raised to the effect that receipt of extra quantity of Iron Ore has been presumed merely on the basis of information supplied by the Railways and charts which have been prepared on the basis of records seized from the premises of M/s. Gyan Singh.
(ii) That, the duty demand cannot be confirmed merely on the basis of the information provided by the RRs of the Railways with regard to alleged receipt of unaccounted quantity of Iron Ore and on the basis of records seized from the transporters without bringing independent and corroborative evidence that the said material was actually used in the manufacture of finished goods i.s. Sponge Iron.
(iii) That, no reliance can be placed on the statements of Sh. Dilip Kumar Markam as his statements could not be tested on cross examination. Further he had not implicated the aforementioned Appellants. His statement was of a general nature. Further, when the statements from the Authorised Signatory of M/s. SPIPL, Directors of M/s. KIPL and M/s. RMIPL were recorded, they were not confronted with the two statements recorded from Sh. Dilip Kumar Markam.
(iv) The statements of Sh. Dilip Kumar Markam were based upon the records which were never relied upon in the show cause notice. In any event in one of the appeals of M/s. RMIPL, the cross examination of Sh. Gyan Singh was held on 21-08-2016 wherein he categorically stated that he was receiving the freights charges only through cheques and denied having received any freight charges through cash. He further stated that records maintained by Sh. Dilip Kumar Markam were incorrect.
(v) There is absolutely no basis for alleged receipt of extra quantity of Iron Ore on the basis of the records of M/s. Gyan Singh over and above the allegation of receipt of Iron Ore through RRs. Attention was drawn in respect of several consignments 12 Appeal No.E/50964/2018 & 12 others which were either lifted by other parties or were not found entered in the records of M/s. Gyan Singh meaning thereby such consignments were lifted by other parties.
(vi) That, no statements from the owners of vehicles or drivers of the trucks which allegedly transported huge quantities of unaccounted Iron Ore were recorded to substantiate the allegations leveled in the respective Show Cause Notices.
(vii) That, it cannot be denied that in order to manufacture 1 MT of Sponge iron, around 2 MT of Iron Ore, 2 MT of Coal and Dolomite equal to 10% of the quantity of Iron Ore is required. There is not even a whisper in any of the show cause notice that the Appellants had received unaccounted quantities of Coal and Dolomite. Therefore, even assuming for argument sake that the Appellants received unaccounted Iron Ore there was no evidence that the same was used in the manufacture.
(viii) That, in the case of M/s. KIPL duty has been demanded by presuming that they suppressed production of 29177.183 MT of Sponge Iron during the period 2006-07 to 2010-11 on the ground of excess consumption of electricity and low yield of Sponge Iron. On this count it is submitted that on this part of the demand there is not even an allegation that M/s. KIPL had received excess quantity of Iron Ore not to speak of Coal and Dolomite.
(ix) That, the duty demand in all cases was merely based on theoretical calculations and it was submitted that duty demand cannot be made merely on the basis of theoretical calculations and higher consumption of electricity.
(x) That, the Authorised Representative in the case of M/s. SPIPL and Directors in the case of M/s. RMIPL and M/s. KIPL in their respective statements had categorically stated that yield of Sponge Iron out of Iron Ore was dependent upon quality of Coal and Iron Ore.
(xi) That, there was no justification for demanding Service Tax on transportation charges as none of the parties received any unaccounted quantity of Iron from M/s. Gyan Singh.
13
Appeal No.E/50964/2018 & 12 others
(xii) That, written submissions along with case law was submitted in the form of a paper book at the time of hearing.
(xiii) A prayer was made for setting aside the duty demands and penalties on the manufacturers and individuals.
16. SUBMISSIONS ON BEHALF OF M/S. PIPL AND M/s. ASPPL
(i) That, demand based upon input output ratio was unscientific.
(ii) That, a chart was prepared on the basis of statement of Railway goods clerk who was not examined by the Department.
(iii) That, no evidence was produced that Sh. Dilip Kumar Markam had died two years back.
(iv) That, without coal and dolomite it is quite improbable rather than technological impossible to manufacture Sponge Iron.
(v) That, the department had not adduced any scientific and technically literature in support of their formula M/s. ASSPL had adduced host of documents to substantiate that the Iron Ore used by them were of poor quality with Fe 59 to 63% as against ideal norm of Fe 65% + and also they have used poor quality of Coal with FC 23% to 30% as against ideal norm of FC 45%. They had submitted copies of purchase invoices of Iron Ore, Coal and Test Certificate etc before the adjudicating authority to prove use of poor quality of raw materials.
(vi) The purported under capacity utilization low yield of Sponge Iron, higher electricity consumption were due to consumption of poor quality of Iron Ore of Fe 59% to 63% as against ideal norm Fe 65% and consumption of poor quality of Coal of Grade E/F with FC 23% to 30% as against ideal norm of FC 45%. The ideal norm of electricity consumption is 90 to 100 unit PMT of Sponge Iron manufactured. However, when the yield is low due to poor quality of raw material the power consumption will be more and the optimum 100% installed capacity can never be achieved. Further, the department did not examine the other parameters such as 14 Appeal No.E/50964/2018 & 12 others fine generating tendency of Iron Ore which increased the Input/output ratio and reduces the yield due to generation of fines while rotating in the Kiln.
(vii) With regard to duty demand of Rs.16,89,782/- on a quantity of 1307.26 MT of Sponge Iron it was submitted that the maker of pocket diary Shri Amrit Lal who was the Lab Incharge could not be produced for cross-examination in spite of specific prayer by M/s. PIPL. As regards Gate passes and parallel invoices the maker of the said documents was not examined. Hence no reliance can be placed on such type of evidence.
(viii) The reliance was placed on the judgment of the High Court of Chhattisgarh dated 04-07-2018 in the case of M/s. Hi Tech Abrasives Limited wherein the Hon'ble High Court has strictly construed the provision of Section 9D of the Central Excise Act by holding the same as mandatory and not mere directory. That, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority.
17. Submission on behalf of M/s MSSPL is also on the lines adopted by the other Appellants and this being not reproduced once again
18. Ld. AR submitted as under;
(i) That, since the Railway is a Government of India organization any information provided by it must be held to be authentic. Therefore, merely because the said information contained in the shape of charts, it cannot be held that the respective parties did not receive the quantity of Iron Ore mentioned in their information.
(ii) That, the department had seized numerous documents from M/s. Gyan Singh and M/s. Amit Roadlines. The charts prepared on the basis of the said seized records duly proved the receipt of unaccounted Iron Ore by all the Appellants.
(iii) That, Sh. Dilip Kumar Markam in the case of M/s. Gyan Singh and Sh. Ajay Chobay in case of M/s Amit Roadlines had duly explained the purport of all the records. Sh. 15
Appeal No.E/50964/2018 & 12 others Dilip Kumar Markam had also stated that they were receiving freight through cheques and cash and in some of the freight bills the actual quantity of Iron Ore was shown to be less. Similar is the case with regard to M/s. MSSPL where one Shri Amit Roadlines was transporting Iron Ore from Uslapur Railway siding for the said manufacturer.
(iv) He relied upon the law laid down by the Hon'ble Apex Court in the case of Commissioner of Customs Vs. D. Bhoormul reported at 1983 (13) ELT 1547 and other judgments wherein it has been held that the Revenue was not required to prove its case with mathematical precision.
19. We have heard the rival submissions and perused the Appeal records.
20. The main issue is to be decided in these appeals are whether huge duty demand can be confirmed merely on the basis of information provided by the Railways and as to whether the duty demand can be confirmed without examining and relying on the original copies of the RRs. We have also to examine as to whether the duty demand can be confirmed merely on the basis of the charts relied upon by the Revenue which has been stated to be prepared on the basis of the records seized from the transporters. The allegation of clandestine removal of finished goods is a very serious charge and required to be proved with independent, corroborative, tangible and affirmative evidence. In all these appeals, it has been presumed by the department that all the six manufactures had received unaccounted quantity of Iron Ore through Railway Sliding at Uslapur. The Sr. Divisional Commercial Manager of South East Central Railway vide his covering letter dated 5-03-2008 had given a list of 156 consignments, which has been made relied upon Documents as evident from the SCN and paperbook submitted by the Appellant. In the case of M/s. SPIPL the said chart appears to have been prepared by the Revenue itself. And not by the Railway Authority. A perusal of these charts reveals that it contained various columns depicating the details, such as station from which Iron Ore was loaded, RR number, date, name of the consigner and consignee, weight, lifted by party, 16 Appeal No.E/50964/2018 & 12 others endorsement, name of the party receiving Iron Ore. While recording the statements from the Directors of M/s. KIPL and MSSPL and authorized signatory of SPIPL, it was explained to the Investigating Officer that the consignee and the party which lifted the material could be different. But in that case RR is to be endorsed by the consigner to the lifter. On the basis of aforesaid endorsements, railways let the lifter (other than consignee/owner of the goods) lift the Iron Ore from the Railway Siding at Uslapur, Bilaspur. Therefore, in absence of original RRs the Revenue cannot allege it could not be as to which of the Appellants had actually lifted the Iron Ore. It was, therefore, absolutely necessary that the department should have obtained original copies of RRs and examined the same to arrive at a definite conclusion regarding the party which actually lifted the Iron Ore from the endorsements carried out in the said RRs and should have examined as to whether a particular manufacturer/ Appellants had entered the said quantity in their statutory records or not. Further, no reliance can be placed on the said chart as in respect of 98 RRs out of total 156 RRs, there is no entry under the column "endorsement" as this column has been left blank. Another irregularity in the said chart is that in many cases the names of the consignor and consignee has been shown as the same. In case of sale of Iron Ore it would be the mine owner which should have been shown as the consigner and not the consignee. Further, in many cases the parties have taken a stand that under the same RRs duty has been demanded from more than one Appellant. A perusal of the information supplied by the Railways reveals that though in many of the RRs consigner, consignee and the lifter has been shown the same person but there are numerous entries where the consigner, the consignee and the party which lifted the material is different from consigner and consignee. There are many entries where the material was lifted by parties like M/s. Jai Ambey Fuel (P) Ltd. and M/s. Bankhe Bihari Enterprises which were treated to be fictitious parties in the Show Cause Notices without bringing any evidence on record to this effect. There is no finding by the Adjudicating Authority that these parties were fictitious or 17 Appeal No.E/50964/2018 & 12 others non-existent in any manner. For example in the case of M/s. SPIPL a huge quantity of around 1100 MT was endorsed by M/s. SPIPL to M/s. Bankhe Bihari Enterprises and M/s. Jai Ambey Fuel (P) Ltd. but the same has been treated to be received by M/s. SPIPL. There are numerous entries where though the chart supplied by the Railway showed that quantities were lifted by a manufacturer/ Appellant but the same were not found mentioned in the records of M/s. Gyan Singh, which would mean that these quantities were lifted by some other parties. Further, most importantly no enquiries were conducted from the consigners/suppliers of the Iron Ore so as to find out as to which party had made payment to them with regard to a particular consignment. Therefore, it would not be proper to assume receipt of unaccounted quantity of Iron Ore merely on the basis of charts provided by the Railways. We have already held that even the duty demand was not fully based upon the said information as the Revenue had held some actual recipients of the Iron Ore to be fictitious and non-existent. Therefore, the information/charts provided by the Revenue cannot be treated to accurate and correct, and thus the same is highly insufficient to hold that substantial quantities of Iron Ore were received by different manufacturers/ Appellants and not reflected in their statutory records.
21. Regarding the allegation and finding about the receipt of unaccounted quantity of Iron Ore on the basis of records of M/s. Gyan Singh, no basis whatsoever has been given in the show cause notice. It has merely been alleged that certain entries as shown in the chart were regarding receipt of Iron Ore by the respective parties on the basis of records seized from M/s. Gyan Singh and not accounted for in the statutory records. It has already been noted hereinabove that records of M/s. Gyan Singh have not been relied upon in the show cause notice. The Revenue merely prepared some charts on the basis of the said records and relied upon by the same as would be evident clear by perusing Annexure to the various show cause notices. There does not appears to be any possibility of receipt of extra quantity of Iron Ore on the basis of the recodes of the transporter as the said transporter was 18 Appeal No.E/50964/2018 & 12 others transporting the entire quantity of Iron Ore through Uslapur Railway Station. It is not the case of the Revenue that M/s. Gyan Singh was loading Iron Ore from any other place in the cases of five out of six manufacturers. Even assuming for argument sake that some quantity of Iron Ore was transported by M/s. Gyan Singh the same must be matched with the quantities shown in the chart provided by the Railway. We, therefore, hold that the records of M/s. Gyan Singh cannot be treated to be true and authentic. We find that Shri M/s. Gyan Singh, in his cross examination categorically stated that he was receiving the entire freight from all the manufacturers/ Appellants of Sponge Iron through cheques only which would mean that there is no scope of receipt of transportation of any unaccounted quantity of Iron Ore. This averment of Sh. Gyan Singh was never controverted by the Adjudicating Authority in his Order.
22. In support of the submission that the charges of clandestine removal cannot be sustained on the basis of RRs and records of the transporters which are third party records reliance has been placed on the following judgments:
(i) 2015 (327) ELT 81 (Tri.-Del) - Aswani & Co. Vs. Commissioner of Central Excise, Delhi-1.
(ii) Final Order No. A/50025-50028/2016-EX (DB) dated 15-01-2016 in the case of M/s. Balajee Perfumes.
(iii) High Court Order dated 11-04-2017 in the case of M/s. Balajee Perfumes.
(iv) 2017 (357) ELT 490 (Tri-All) P&J Aromatics Vs. CCE, Kanpur.
We find that the present cases are more similar to the judgment of this Hon'ble Tribunal in the case of P&J Aromatics, (supra). In this duty was demanded and confirmed on two counts. There was demand of duty on the basis of Annexure-A to the show cause notice which was prepared by Revenue as claimed by them that the said annexure was based on bilty books and challans resumed from M/s. Bharat Freight Carriers which was a transport company. However, such bilty books and 19 Appeal No.E/50964/2018 & 12 others challans were not made relied upon documents for issue of show cause notice. Similarly duty was demanded on the basis of information provided by the Railway about the goods ZardaGutkha/Zarda pouch booked from Agra Railway Station during the disputed period. But even in that case the demand was based on the information supplied by the Railways. The department presumed that the information contained in Annexure-A to the Show Cause Notice and said RRs pertained to the clearances of gutkha by P&J Aromatics. The Tribunal in para 10 of their Order has held in clear terms that Annexure-A to the show cause notice was prepared on the basis of Billty books and challans resumed from transporter but the records resumed from M/s. Bharat Freight Carriers were not relied upon for issue of show cause notice. In such a case the demand of duty was set aside. The Tribunal further held that the entire demand on the basis of information given by Railway Authorities that 40553 bags of gutkha were clandestinely removed was not established. The findings given in this judgment is fully applicable to the facts of the present case in as much as even in the present case the department has not relied upon the copies of RRs and records of the transporters.
23. The next issue is to be decided is as to whether the RRs and records of the transporters are sufficient to saddle a manufacturer/Appellant with a huge duty liability on the allegation of clandestine removal. In the under noted cases it has been held that the records of the transporters are third party record and duty cannot be demanded merely on the basis of records seized from the transporters:
(i) CCE, Delhi-1 Vs. Vishnu & Co. Pvt. Ltd. - 2016 (332) ELT 793 (Del.)
(ii) Commissioner Vs. Motobhai Iron and Steel Industries - 2015 (316) ELT 374 (Guj).
(iii) CCE Vs. Brims Products - 2011 (271) ELT 184 (Pat).
(iv) Kumar Trading Company Vs. Commissioner of Trade Tax, Lucknow (All) 20 Appeal No.E/50964/2018 & 12 others
(v) Indo Green Textile Pvt. Ltd. Vs. CCE, Thane, Mumbai - 2007 (212) ELT 343 (Tri-Mum).
(vi) Kothari Pouches Ltd. Vs. CCE, New Delhi - 2001 (135) ELT 531 (Tri. -
Del).
(vii) Rama Shyama Papers Ltd Vs. CCE, Lucknow - 2004 (168) ELT 494 (Tri.
- Del).
(viii) Shree SidhbaliIspat Ltd Vs. CCE, Nagpur - 2017 (357) ELT 724 (Tri. -
Mumbai).
Of the above judgments the two which are quite relevant in the facts and circumstances of the case are that of Vishnu & Co. (P) Ltd. rendered by Hon'ble Delhi High Court and another of Hon'ble Patna High Court in the case of Brims Products, supra. In the case of Vishnu & Co. Pvt Ltd. the Hon'ble Delhi High Court has held records of the transporter cannot be relied upon to prove the charge of clandestine removal. It was further held that it was for the department to explain why entries in the documents seized from the transporters were not further investigated by them and that it was for the department to establish link between such evidence and the assessee. The Patna High Court in the case of Brims Products, supra also laid down the law that unaccounted receipt of raw material is not the conclusive proof of production of clandestine sale of finished goods. It has further been held that even if the records of the transporter show that one main raw material was received clandestinely still the Revenue has to prove it beyond doubt about the clandestine manufacture and removal of finished goods. These two judgments are fully applicable to the cases at hand. We, therefore, hold that the records of the transportation is sufficient enough to fasten the appellant with the aforestated demands, unless corroborated with the other evidence, which Revenue has not been successful in doing so.
21
Appeal No.E/50964/2018 & 12 others
24. The next issue which is to be decided is as to whether in the absence of cross examination of Sh. Dilip Kumar Markam reliance could be placed upon his statements. In this regard, we find that even without his cross examination no reliance could be placed on his statements as the same were based upon records which have not been relied upon by the department in the show cause notice. Further, Shri Dilip Kumar Markam had not implicated any particular Appellant/assessee/manufacturer of Sponge Iron. None of the Directors or authorised signatory whose statements were recorded were confronted with the statements of Sh. Dilip Kumar Markam. In any event, the averments of Sh. Dilip Kumar Markam were rebutted by Sh. Gyan Singh in his cross examination conducted by M/s. RMIPL. Hence the statement of Sh. Dilip Kumar Markam cannot be seen in isolation. If Sh. Gyan Singh was receiving all the freight through cheques the question of receipt of unaccounted iron ore by any of the manufacturers could not arise. Similarly, in the case of M/s. Amit Roadlines only charts prepared on the basis of records seized from their premises were relied upon in the show cause notice. No evidence was brought on record that M/s. SPIPL had received any quantity of unaccounted Iron Ore.
25. We find that with respect to M/s. KIPL and M/s. ASPPL the allegations were also leveled that they suppressed production other than based upon RRs and records of the transporters. In respect of M/s. KIPL there was an allegation that they manufactured production of 29177.183 MT of Sponge Iron during the period 2006-07 to 2010-11 on the ground that they had consumed higher electricity during the said period. In respect of M/s. ASPPL similar allegation was made that during the period Oct 2005 to 2009-10 they manufactured 220146.00 MT of Sponge Iron. In this regard, we find that this duty demand was merely based upon theoretical formula without any scientific basis and also independent or corroborative evidence. In respect of this duty demand there is not even an allegation that M/s. KIPL or M/s. ASPPL had received any unaccounted quantity of Iron Ore. It cannot be denied that 22 Appeal No.E/50964/2018 & 12 others both the manufactures were receiving Iron Ore from Railway rakes, Uslapur and entire quantity of their Iron Ore was being transported by M/s. Gyan Singh. There is not even an iota of evidence that the quantity required to manufacture 29177.18 MT in the case of M/s. KIPL and quantity of Iron Ore required to manufacture 22014.066 MT in the case of M/s. ASPPL was received by these two manufacturers during the said period which was not recorded in their statutory records. Hence any duty demand on this quantity is wholly unjustified and not based on any evidence whatsoever.
26. We find that for the entire duty demand the Adjudicating Authority has also given finding that there has been abnormal trend in the monthly production of all the units and they had also consumed higher electricity during certain months. It has also been held that in some months the Appellants had shown low recovery of Sponge Iron from Iron Ore. He has, therefore, held that this was a collateral evidence to substantiate the allegation in the show cause notice that the Appellants were suppressing the production and hence he has agreed with the formula of input output ratio adopted by the department while issuing the show cause notices to all the manufacturers.
26.1 It is evident from the statements of the Directors of the units/ Appellants as well as Authorised Representative of one of the Appellant that the units have already been noted above. Conclusion draws by the Adjudicating Authority is not correct and devoid of facts. The contentions of the respective counsel have also been taken note of. It has been argued by the Ld. Counsel that they were using poor quality of iron ore and coal during the material period. In this regard, some of the parties/Appellant have also submitted evidence to that effect. It has also been urged that because of poor quality of iron ore and coal there was higher consumption of electricity and low yield of Sponge Iron. This also resulted in under utilization of their installed capacity. The parties/Appellants have also made similar submissions before the Principal Commissioner, the Adjudicating 23 Appeal No.E/50964/2018 & 12 others Authority. These submissions have neither been rebutted or controverted by the Adjudicating Authority nor by the learned ARs, who appeared on behalf of the Revenue. Without proper scientific norms adopted by the Revenue to find out the actual yield of Sponge Iron and quantum of consumption of electricity such conclusion in fallacious. Further, some of the parties/ Appellants in their initial statements itself submitted that they were receiving poor quality of coal and Iron Ore. Nothing was bought on record in the show cause notices in rebuttal of these averments which were made by the manufacturers. 26.2 There are plethora of judgments wherein it has been held that duty cannot be demanded on theoretical calculation. It has been held that in order to prove clandestine removal the department has to bring on record independent and corroborative evidence. Some of the judgments are below mentioned:
(i) Punalur Paper Mills Ltd. Vs. Collector of Central Excise & Customs, Cochin reported at 2009 (244) ELT 204 (Tri. - Bang).
This judgment of the Tribunal was upheld by the Hon'ble Karnataka High Court as reported in 2016 (341) ELT A211 (Ker).
(ii) Swati Polyster Vs. CCE, Surat-1 reported at 2005 (192) ELT 985 (Tri. -
Mum).
This judgment of the Tribunal was upheld by the Hon'ble Gujarat High Court as reported in 2008 (221) ELT A25 (Guj).
(iii) Mahavir Metals Industries Vs. Commr. Of Central Excise & Customs, Daman, Vapi reported at 2014 (313) ELT 581 (Tri. - Ahmd).
(iv) Mittal Pigment Pvt. Ltd Vs. CCE, Jaipur reported at 2018 (360) ELT 157 (Tri. - Del).
(v) Nav Karnataka Steels Pvt. Ltd.Vs. CCE, Belgaum reported at 2008 (225) ELT 454 (Tri. - Bang).
24
Appeal No.E/50964/2018 & 12 others
(vi) Polyfill Sacks Vs. Commissioner of Central Excise &Customs, Vadodara-1 reported at 2009 (245) ELT 806 (Tri. - Ahmd).
(vii) Hindustan Coca Cola Beverages Pvt. Ltd Vs. Commr of Central Excise, Thane-1 reported at 2006 (205) ELT 700 (Tri-Mum).
26.3 There are also numerous judgments on the issue that duty cannot be demanded merely on the basis of higher consumption of electricity. In this regard, counsel has relied upon the following judgments:
(i) R.A. Castings Pvt. Ltd Vs. CCE, Meerut-1 reported at 2009 (237) ELT 674 (Tri. - Del). This judgment of the Tribunal was upheld by the Hon'ble Allahabad High Court as reported at 2011 (269) ELT 337 (All). The appeal of the Revenue was also dismissed by the Hon'ble Supreme Court as reported at 2011 (269) ELT A108(SC).
(ii) Om Shanti Steel & Castings Pvt. Ltd Vs. Union of India reported at 2017 (347) ELT 441 (Jhar).
(iii) Final Order No. A/51982-51997/2018-EX(DB) dated 23-05-2018 in the case of Hem Chand Gupta and Sons and others. (paras 4.1, 6, 7 and 7.1).
In view of above discussions, we hold that the Adjudicating Authority has erred in confirming the duty demand on the basis of incortieal formula and higher consumption of electricity.
27. We also find that another important and critical evidence about the alleged manufacture of finished goods which is completely missing in the present cases is that in order to manufacture Sponge Iron a manufacturer requires 2 MT of iron ore, 2 MT of coal and 10% of quantity of Iron Ore. Though it was alleged that all the manufactures had received unaccounted iron ore from the Railway side at Uslapur and on the basis of the records of transporter, M/s. Gyan Singh in respect of five manufacturers and by M/s. Amit Roadlines in the case of M/s. MSSPL but there is not even any evidence in any of the show cause notices and there is no finding at all 25 Appeal No.E/50964/2018 & 12 others by the Adjudicating Authority that all the six manufacturers had received proportionate quantity of two other major raw materials i.e. Coal and Dolomite. The requirement of Coal is almost in the same quantity as that of Iron Ore. The department has not brought any evidence that all the six manufactures had received proportionate quantity of Coal and Dolomite which is required in very huge quantity in order to manufacture Sponge Iron. The counsel for M/s. SPIPL, M/s. KIPL and M/s. RMIP relied upon the following judgments wherein it has been held that unless there is evidence to prove receipt of unaccounted extra procurement of all the raw materials in proportionate quantity the allegation of clandestine removal cannot be sustained. It has also been held in these judgments that cases of clandestine removal cannot be made out merely on the basis of receipt of one raw material when in order to manufacture final product several other raw materials are also required:
(i) Vishwa Traders Pvt. Ltd. Vs. Commissioner of Central Excise, Vadodara, reported at 2012(278) ELT 382 (Tri.-Ahmd.). This judgment was upheld by the Hon'ble Gujarat High Court as reported in Commissioner of Central Excise, Customs & Service Tax Vs. Traders P. Ltd, reported in 2013 (287) ELT 243 (Guj.) and subsequently by the Hon'ble Supreme Court Commissioner Vs. Vishwa Traders Pvt. Ltd., reported in 2014 (303) ELT A24 (S.C.).
(ii) Mohan Steels Ltd. Vs. Commissioner of Central Excise, Kanpur, reported at 2004 (177) ELT 688 (Tri-Del.).
(iii) A.R. Shanmugasundaram Vs. Commissioner of Central Excise, Salem, reported at 2016 (333) ELT 158 (Tri.-Chennai).
28. We accordingly hold that in absence of evidence of procurement of all the raw materials in proportionate quantities its cannot be concluded that the Appellants have included in the clandestine manufacture sponge Iron, the final product.
29. We find that demand of Rs.16,89,789/- from M/s. PIPL on a quantity of 1367.62 MT of Sponge Iron. It has been contended by the learned Counsel that the said demand 26 Appeal No.E/50964/2018 & 12 others is based upon certain private records. They had requested for the cross- examination of Shri Shailendra Kumar Thawait, Manger (Accounts), M/s. Phil Ispat P. Ltd. Bilaspur, Shri P.S. Rao, General Manager (Plant), M/s. Phil Ispat P. Ltd., Bilaspur, Shri Amit Patel, Laboratory Assistant, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Niveet Mittal, Ex-Director, M/s. Phil Ispat P. Ltd., Bilaspur, Shri Pradeep Jha, Ex- Director M/s. Phil Ispat P. Ltd., Bilaspur, and Shri Manoj Sharma, General Manager (Commercial), M/s. Phil Ispat P. Ltd., Bilaspur, This request has taken note of in chart in para 9 of the impugned order. However, none of the witnesses appeared for cross-examination. It is noted that there is no independent finding by the Adjudicating Authority on this part of the duty demand.
30. Therefore, the matter requires to be remanded back to the Adjudicating Authority by setting aside that portion of order.
31. The case needs to be re-adjudicated taking into account the submissions made by the party and affording the opportunities of cross examination of witness and following the principle of natural justice. Hence this portion of the order is set aside and appeal is allowed by way of remand.
32. In all these cases there are duty demands on huge quantity of Sponge Iron. There is not even iota of evidence in any of the show cause notice about the clearance of finished goods to any party in clandestine manner. There is not even a single case where any clandestinely removed Sponge Iron was intercepted in transit, though the duty demand pertains to fairly a long period of time. There was not even a single effort made by the investigating officers to find out as to whom such a huge quantity of Sponge Iron was sold by the six manufacturers. It has already been noted hereinabove that the allegation of clandestine removal is very serious charge and the same cannot be simply upheld on assumptions and presumptions. The department must bring on record independent and corroborative evidence. In the present set of case the following parameters are completely missing:
(a) No evidence of manufacture of such a huge quantity of Sponge Iron. 27
Appeal No.E/50964/2018 & 12 others
(b) No evidence of unaccounted extra procurement of other two major raw materials i.e. Coal and Dolomite corresponding to the quantity of Iron Ore alleged to have been procured, which is essential for manufacture of Sponge Iron allegedly manufactured and cleared by the six manufacturers.
(c) No evidence of payment of any labour charges for production of alleged clandestinely manufactured and removed Sponge Iron.
(d) No evidence of receipt and consumption of inputs.
(e) No evidence of purchase of extra raw material (even Iron ore) and payments made there against.
(f) No evidence of physical transportation of raw material (even Iron ore) to the factory of the six manufacturers.
(g) No evidence of payments, if any, received against alleged removal of Sponge Iron by any of the six manufacturers.
(h) No evidence of transportation of clandestinely removed Sponge Iron from the factory of the six manufacturers.
(i) No evidence of delivery of Sponge Iron at destination by any of the six manufacturers.
33. We, therefore, hold that since in these appeals there is no evidence of clearance of finished goods duty demand on the Sponge Iron cannot be sustained.
34. The learned Authorised Representative relied upon the judgment of the Hon'ble Apex Court rendered in the case of Collector of Customs, Madras and Others Vs. D. Bhoormull, reported in 1983 (13) ELT 1546 (S.C.) and few other judgments. According to him in these judgments it was held that in cases of clandestine removal of goods Revenue was not required to prove its case with mathematical precision. This submission of the learned Departmental Representative cannot be the countanced. There are several judgments wherein it has been held that allegation of clandestine removal is a very serious charge and has to be proved with independent, corroborative and tangible evidence where the judgments relied upon 28 Appeal No.E/50964/2018 & 12 others by the learned Authorised Representative have been distinguished. The Hon'ble Delhi High Court in the case of Commissioner of Central Excise, Delhi Vs. Vishnu & Co. Pvt. Ltd., reported at 2016 (332) ELT 793 (Del.) in para 36 of their judgment has held that the decision in Collector of Customs, Madras Vs. D. Bhoormull (supra) was specific to the provisions of Sea Customs Act, 1878 pertaining to smuggling. Although it is observed by the Court that this initial onus of proof on the Department can be sufficiently discharged by circumstantial evidence this was in the context of the fact that provision itself shifted the burden on the person in whose possession the contraband is found. As far as the CE Act is concerned, there is no such provision that raises a presumption and shifts the burden on to the person who is charged with clandestine removal of excisable goods. Section 14 of the CE Act provides for a detailed enquiry involving the gathering of evidence through documents and recording of statements. It does not dispense with the principles of natural justice or the general principles of fairness that govern all departmental inquiries.
35. Since there is no evidence of transportation of extra quantity of iron ore by either M/s. Gyan Singh or M/s. Amit Roadlines, no case of duty demand under the Finance Act, 1994 can be made out.
36. Since duty demand itself is not sustainable, penalty on the all manufacturing units and also individual case not sustainable. We accordingly allow the Appeals in above terms.
(Pronounced in open court on 13/11/2018)
(Anil Choudhary) (Bijay Kumar)
Member(Judicial) Member(Technical)
Tejo