Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & S. Tax, ... vs Bihar Foundry And Costing Ltd on 1 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. E/70752/2013
(Arising out of Order-in-Appeal No. 64/RAN/2013 dated 12.04.2013 passed by the Commissioner of Central Excise & S. Tax, Ranchi.
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, MEMBER (TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
Commissioner of Central Excise & S. Tax, Ranchi
Applicant (s)/Appellant (s)
Vs.
Bihar Foundry and Costing Ltd.
Respondent (s)
Appearance:
Shri A. Roy, Suptd (AR), for the appellant (s) Shri Saurabh Bagarier & Parthav Banerjee, Adv, for the Revenue (s) CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision: 01.04.16 Date of Pronouncement: 01.04.16 ORDER No.FO/75249/16 Per Shri H.K.Thakur This appeal has been filed by the Revenue against OIA No. 64/RAN/2013 dt 12/4/2013 passed by Commissioner (Appeals) Ranchi as first appellate authority.
2. Sh. A. Roy Supdt (AR) appearing on behalf of the Revenue argued that appellant is getting M.S. Bars manufactured from its job workers by supplying M.S. Ingot. That Mill Scale Scrap originated during job work has been claimed to be from 4.01 to 10.01% during the period 2006-07 to 2008-09 which should have been normally in the range of 1 to 3 % as held by the Adjudicating authority. That appellate authority below has not countered the findings given by the Adjudicating authority. That Mill Scale Scrap burning loss of 10% is not justifiable as Respondent herein itself has claimed a loss of Mill Scale Scrap / Burning loss of 4.01% in the later years by modification of their re-heating furnace. That Revenues case is squarely covered by the Apex Courts judgment in the case of CC Madras & others Vs. D. Bhoormul [1983 (13) ELT 1546 (S.C.) in as much as department is not required to prove its case with mathematical precision.
3. Sh. Saurabh Bagaria (Advocate) & Sh. Partha Banarjee (Advocate) appeared on behalf of the Respondent. Sh. S. Bagaria (Advocate) during the course of hearing & written submissions argued that department is not able to give any scientific authority as to how Mill Scale Scrap / burning loss should always be in the range of 1 to 3 %. That by a letter dt 17/2/2009 Project Management cell of Ministry of Steel GOI, New Delhi; written to one of the Job worker M/s. Akshaya Roll (P) Ltd, job worker was advised to use pulverized coal technology instead of old coal based technology. That it is also coming out of this letter that appellant was initially using low grade steel ingots and percentage loss was higher. That these facts have been discussed by the first appellate authority in Para-5 & 6 of the OIA dt 12/4/2013 before allowing their appeal. That the M.S. Ingots sent & finished good received by his client were duly accounted for by Annexure 6 Job worker challans which clearly indicated Mill Scale Scrap generated in each processing. That raising a demand on a presumption, that such mill scale scrap / loss is only to the extent of 1 to 3%, is not borne out by any evidence. Learned Advocate relied upon the following case laws on the subject & on the aspect that clandefine removal can not be established an the basis of assumptions:-
(i)
(ii)
(iii)
(iv) 2007 (217) ELT 469 (T) (Narbada Steels Limited Vs. CCC) 2007 (209) ELT 242 (T) (Ashutosh Castings Limited Vs. CCE) 2006 (204) ELT 87 (T) (Ram Steel Rollings Vs. CCE) 2004 (170) ELT 451 (T) (Western Metal Caps Vs. CCE)
(v)
(vi)
(vii)
(viii) 1995 (80) ELT 708 (T) (CCE Vs. Multiwyn Ind Corpn.) 2015 (322) ELT 723 (T) (CCE & ST Vs. Om Steel Rolling Mills) 2015 (317) ELT 268 (T) (Taloja Forging Pvt. Ltd. vs. CCE) 2015 (316) ELT 175 (T) (CCE Vs. Shyam Udyog Ltd.) 3.1 It is also the case of the Respondent that extended period can not be made applicable. That the case law of CCE Vs. D. Bhoormul (Supra), relied upon by the Revenue, is not applicable on facts & law because in that case department had discharged initial onus of clandestine activity. That in the present case demand is purely on an assumption that Mill Scrap / loss has to be in the range of 1 to 3% without any evidence.
4. Heard both sides & perused the case records. The issue involved in the present proceeding is whether the Mill Scale Scrap / burning losses, claimed by the Respondent with respect to conversion of M. S. Ingots to M.S. bars got done from the job workers, is correct or the same should be in the range of 1 to 3%. It is observed from the case records, that much before the issue of show cause notice date 2/5/11, one of the job workers of the appellant got a letter dt 17/2/2009 from Project Management Cell, UNDP, GOI, New Delhi that burning loss of 10% is on the higher side & advised, referring to earlier discussions to carry out certain modifications, interalia, in term of using pulverized coal technology instead of old coal based technology. Accordingly the modifications were made by the job worker and the mill scale scrap / loss generation has shown gradual decrease from 10. 01 to 4.01% during the period 2006-07 to 2009-10 There is no evidence on record that any consignment of M.S. Bars, got manufactured from the job workers, was clandestinely diverted by the Respondent. The % age of Mill Scale Scrap / Loss has been clearly reflected in the Job work challans & the same has not been always claimed at more than 10%. Further no authority / study has been quoted by the Revenue to indicate that such Mill Scale Scrap / loss has invariably to be in the range of 1 to 3 %. This has been discussed by the first appellate authority in Paras- 5 & 6 of the OIA dt 12/4/2013. In the absence of any such evidence contrary to the claim of the appellant Mill Scale Scrap generated during job work can not be held as an evidence of clandestine manufacture & clearance of M.S. Bars. The same can also not be considered as sufficient evidence to demand differential duty from the Respondent.
4.1 Above view taken also gets fortified by the case law of this bench in the case of CCE Calcutta-II Vs. Murttiwyn Industrial corp. [1995 (80) ELT 708 (Tribunal)]. In the case while rejecting the appeal filed by the Revenue, following observations were made by this bench in Para-9:-
9. The appeal does not succeed, however, on the other grounds. The Assistant Collector has observed in his order that the burning losses vary from 5 to 8% and in some cases, can go upto 10% whereas in the present case such losses were almost uniformly 10%. He had allowed 5% losses and demanded duty on the losses in excess thereof. He has also observed that the losses should be of varying levels and not uniform as reported by them. There is no basis for such a finding. The loss due to burning in the manufacturing process will depend upon various factors like the material used product made, the process, power supply including breakdown etc. merely because the losses were reported around 10% it cannot be held that such figures did not represent the correct position and that the inputs were not accounted for. Moreover, the normal quantum of losses as per the enquiries conducted is reported to be in the range of 5% to 8%. There is no reason indicated, why the minimum level has been applied and excess thereabove disallowed. The method employed is arbitrary and cannot be upheld. The amount of duty involved is also about Rs. 10,000/-. If there was some doubt felt by the Assistant Collector that the respondents and not accounted for the inputs sent out by them to their job workers for processing and had shown excess losses. The findings have not been supported by any reliable enquiry and data arrived at. The respondents, in any case, are entitled to the benefit of doubt. I accordingly dismiss the appeal in regard to the plea for restoration of the Assistant Collectors order.
5. Further as per the above observations and the case laws relied upon by the Respondent a charge of clandestine removal can not be said to be established merely on the basis of presumption that normal Mill Scale Scrap / loss is in the range of 1 to 3 %. It is true that department is not required to prove its case with mathematical precision, as per Apex Courts order in the case of CC Madres & other Vs. D. Bhoormul (Supra), but this case law does not convey that clandestine removal should be upheld even if the same is based on presumptions & assumptions as is the case in this appeal. In the absence of any such positive evidence regarding clandestine removal appeal filed by the Revenue is required to dismissed. Bench has not gone into the time barred aspect of the demand as on merits the appeal of the Revenue is not sustainable.
6. In view of the above observations & settled proposition of law this bench does not consider it proper to interfere with the order dt 12/4/2013 passed by the first appellate authority. Appeal filed by the Revenue is dismissed.
(Operative part of the order was pronounced in the open court.) (H.K.THAKUR) MEMBER (TECHNICAL) TUSHAR KUMAR 2 Appeal No.E/70752/2013