Custom, Excise & Service Tax Tribunal
M/S. Meenakshi Castings Pvt. Ltd vs Cce, Kanpur on 12 October, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066. BENCH-,,,,,SM Date of Hearing/Decision:12.10.2010 Excise Appeal No. E/2028/07-SM [Arising out of Order-in-Appeal No.82-CE/APPL/KNP/2007 dated 02.03.2007 passed by the Commissioner(Appeals), Central Excise, Kanpur] For approval and signature: HONBLE Mr. ASHOK JINDAL, MEMBER (JUDICIAL) 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 authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Meenakshi Castings Pvt. Ltd. Appellant Vs. CCE, Kanpur Respondent
Present for the Appellant :Shri.Bipin Garg, Advocate Present for the Respondent:Shri.S.K. Bhaskar, DR Coram: HONBLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) ORDER NO. _______________ DATED:12.10.2010 PER: ASHOK JINDAL The appellant filed this appeal against the confirmation of penalty under Rule 173 Q. The facts of the case are that a show cause notice was issued to the appellant on the basis of power consumption figures obtained by the department from U.P. State Electricity Board, Jhansi and month-wise production in the appellants factory and after comparing both electricity consumption and production at an average of 1000 Unit per metric ton during the period February 1997 to April, 1997. A duty demand was confirmed against the appellant for 331.36 MT excess production of M.S. Ingots in their factory, same was adjudicated, duty demand was confirmed alongwith interest and penalties by the lower authorities but on appeal before the Commissioner (Appeals), he remanded back the matter to the adjudicating authority with the direction to the Commissioner to initiate proceedings according to law, as and when norms of electricity consumption per metric ton of MS Ingots is determined by the Commissioner in accordance with the observation of the Tribunal in their final product in the case of Hans Casting Ltd. reported in 1998 (102) ELT 139 (Trib.). In remand proceedings, as the Unit of the appellant was not functioning, a survey was conducted in the factory of M/s.Hans Casting Pvt. Ltd. on 14.3.01, 17.3.01 and 21.3.2001, wherein as per production, the average consumption of electricity comes to 1067 Units per metric ton and on the basis of this consumption the average was worked out at 1100 Units per metric ton and matter was reassessed. The demand was reduced to Rs.88,023/- and the penalty of Rs.30,000/- was also imposed. Same was upheld by lower appellate authority.
2. Aggrieved from the said order the appellant is before me.
3. Shri Bipin Garg, ld. Advocate appeared on behalf of the appellant submitted that earlier the assessment was made on the basis of 1000 Units Per Metric ton but on remand proceedings the demand has been confirmed on the basis of average consumption of 1100 units per metric ton, which is not the correct view taken by the lower authority. He submitted that in fact the average consumption of the appellant is also only 1149 units per metric ton as compared to Hans Casting Pvt. Ltd. on which the Revenue relied the consumption of electricity of 21st March, 2001 was of 1239 units per metric ton. He also submitted that the consumption of electricity varies from unit to unit and heat to heat and various other factors are to be considered to arrive at an average consumption formula and in the case of appellant nothing has been brought out by the Department that corroborative evidence with regard to procurement of raw-material, any other incriminating documents, the place of removal, how the goods were transported, no other statement has been taken on record. He also submitted that all the demand has been confirmed on presumptions. While impugned order is setting aside, in support of his contentions, he relied on R.A. Casting Pvt. Ltd reported in 2009 (237) ELT 674 (Tri.-Delhi), wherein this Tribunal has held that electricity consumption varies from one unit to another and no uniformly acceptable standard of electricity consumption adoptable. Same view has been confirmed by the Honble High Court of Allahabad in Central Excise Appeal No.67/09 vide order dated 9.9.10 confirming the view taken by this Tribunal.
4. On the other hand, ld. DR submitted that in remand proceedings the Commissioner, Adjudication has issued the notice to the appellant to conduct the survey of electricity consumption at Hans Casting Pvt. Ltd. and on the basis of that survey, it has been arrived that the average consumption is 1067 units per metric ton and the adjudication authority has assessed the production on the average of 1100 units per metric ton during the course of survey, a notice was given to the appellant and they have not raised any objection to the way of conducting the survey. He further submitted that this Tribunal has observed in the case of Nagpal Steels Ltd. vs. CCE, Chandigarh reported in 2000 (125) ELT 1147 and in Hans Casting Pvt. Ltd. it was held that the average consumption of 1100 Units per metric ton is the correct formula and on the basis of that average consumption, the demand has been confirmed in this case. Accordingly, the impugned orders are to be sustained.
5. Heard both sides.
6. After going through carefully the submissions made by both sides, I find that in this case the show cause notice was issued to the appellant on the basis of average consumption of electricity for production of M.S. Ingots in their factory. As per earlier adjudication, the average consumption of electricity was taken at the rate of 1000 Unit per metric ton and later on it was taken at 1100 unit per metric ton. I have seen the survey report conducted on the premises of Hans Casting and in that survey report, it is clear that the consumption of electricity varies all the times. Sometime it is 858 units per metric ton and sometimes it is 1239 units per metric ton. Therefore, I find force in the contention of the ld. Advocate that the consumption of electricity varies from unit to unit depending on the quality of inputs and electricity failure etc. In these circumstances, I cannot arrive at a set formula of particular units used for consumption of particular quantity of goods. Moreover, in appellants case the average consumption is 1149 units per metric ton, which is not so high as compared to Hans Casting because in the case of Hans Casting on 21st March, 2001 the average consumption of electricity was 1239 units per metric ton. These facts were to be considered by the lower authorities, while confirming the demand. Moreover, the contention of the DR that they have not raised any objection to the survey conducted by Hans Casting is not acceptable, as the appellants filed an objection to that survey. In the case of RA Casting Pvt. Ltd., this Tribunal has observed as under:-
The Tribunal observed that it is settled principle of law that the electricity consumption can not be the only factor or basis for determining the duty liability, that too on imaginary basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reason for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiments have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing one MT of steel ingots. Tribunal also observed that the electricity consumption varies from one unit to another and from one date to another and even from one heat to another within the same date. Therefore, no universal and uniformly acceptable standard of electricity consumption can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations.
7. From the observations of this Tribunal in the case of RA Casting Pvt. Ltd., it is clear that the average arrived by the lower authorities on the basis of survey conducted at the unit of Hans Casting Pvt. Ltd. cannot be relied upon. Accordingly, the demand is not sustainable. Hence, the impugned order is set aside. Appeal is allowed with consequential relief.
[Dictated & Pronounced in the open Court].
(ASHOK JINDAL) MEMBER (JUDICIAL) Anita