Jharkhand High Court
Ms Nanak Ispat P Ltd Through Its Director ... vs Union Of India Through The Commissioner ... on 11 January, 2017
Equivalent citations: 2017 (2) AJR 307
Author: D.N. Patel
Bench: D. N. Patel, Ratnaker Bhengra
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (T) No.7408 of 2012
With
I.A. No. 2561 of 2014
M/s Nanak Ispat (P) Ltd., a private limited company duly incorporated under
the provisions of the Companies Act, 1956, having its Office and Works at
NS112, 6th Phase, Adityapur Industrial Area, P.O. & P.S. Adityapur, Jamshedpur,
District East Singhbhum, through its Director Amit Gupta, S/o Late Kailash
Prasad Gupta, Resident of NS112, 6th Phase, Adityapur Industrial Area, P.O. &
P.S. Adityapur, Jamshedpur, District East Singhbhum ... Petitioner
Versus
1. Union of India, through the Commissioner of Central Excise & Service Tax,
143, New Baradwari, Sakchi, Jamshedpur, District East Singhbhum
2. Commissioner (Appeals), Central Excise & Service Tax, having its Office at 6 th
Floor, Mahabir Tower, Main Road, Ranchi, P.O. & P.S. Hindpiri, District Ranchi
3. Additional Commissioner of Central Excise & Service Tax, Jamshedpur, P.O. &
P.S. Jamshedpur, District East Singhbhum ... Respondents
CORAM: HON'BLE MR. JUSTICE D. N. PATEL
HON'BLE MR. JUSTICE RATNAKER BHENGRA
For the Petitioner : Mr. Sumeet Gadodia, Advocate
Mr. Piyush Poddar, Advocate
Mr. Ritesh Kumar Gupta, Advocate
Mr. Ranjeet Kushwaha, Advocate
For the Respondents : Mr. Ratnesh Kumar, Advocate
20/ Dated: 11
th
January, 2017
Oral Order Per D.N. Patel, J.:
1. This writ petition has been preferred challenging the OrderinOriginal No. 0203/Addl. Commr./2008 dated 29th February, 2008 passed by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur (Annexure1), mainly on the ground that issuance of the show cause notice and OrderinOriginal has been passed on presumptions and surmises. The highest case of the department is that there is some possibilities of clandestine removal of the M.S. Ingot, which is a final product of this petitioner. 2
2. Factual matrix:
● This writ petitioner is manufacturing M.S Ingot from sponge iron and they are manufacturing M.S. Ingot since long.
● Show cause notice dated 30.03.2007 was given by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur for the period running from 200405 to 200506.
● The petitioner appeared before respondent no.3 pursuant to the show cause notice and filed its reply on 15th January, 2008.
● In the reply filed by the petitioner, it had specifically prayed for an opportunity to crossexamine Dr. N.K. Batra, Professor of IIT as the Technical Opinion Report, prepared by him was relied in the show cause notice. ● However, in spite of the request made by the petitioner, the petitioner was not granted any opportunity to crossexamine Dr. N.K. Batra. ● Thereafter, the OrderinOriginal was passed by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur on 29th February, 2008. ● Being aggrieved and dissatisfied by the show cause notice as well as by the OrderinOriginal, the present writ petition has been preferred.
3. Arguments canvassed by the counsel for the petitioner:
● Counsel appearing for the petitioner submitted that there is gross violation of principle of natural justice. The report of Dr. N.K. Batra was referred to and relied upon, in the show cause notice but in spite of specific request of the petitioner, the petitioner was not allowed to examine Dr. N.K. Batra. ● The whole show cause notice is issued upon presumptions and surmises about unaccounted manufacturing of M.S. Ingots and clandestine removal of the final product and nothing has been proved by the respondents. Only on the basis of presumptions, the show cause notice has been decided. The consumption of electricity pattern which is referred in the show cause notice as well as in the 3 OrderinOriginal, is absolutely baseless. It is submitted by the counsel for the petitioner that looking to Annexure B1 and B2 as referred in para 3 of the show cause notice, reveals the electricity consumption per M.T. , which is absolutely in consonance with the report given by the Joint Plant Commissioner constituted by the Ministry of Steel, Government of India and as per this report, the consumption can be 1800 KWH/T (as referred in paragraph no 20 of a decision reported in 237 ELT 674 in the case of R.A. Casting (Private) Ltd. Vs. CCE, case. Thus, there is no scientific survey carried out by the respondents which can lead to conclusive evidence of unaccounted manufacturing of M.S. Ingots and clandestine removal thereof.
● It is further submitted by the counsel for the petitioner that Dr. N.K. Batra's report has been referred every now and then, since 2003 onwards, by the respondents and there are no less than one dozen judgments in which it has been observed right from the learned Tribunal to the Hon'ble Supreme Court of India that electricity consumption per se cannot be relied upon by the respondents for proving clandestine removal of final product, because there is no set pattern for consumption of electricity. There are several reports given by more reliable institutions and persons than Dr. N.K. Batra, which have been referred in the aforesaid decisions of R.A. Castings. Cross examination of Dr. N.K. Batra is also not made available, despite the request was made. The respondents ought to have carried out experiment of consumption pattern of electricity at the factory premises of the noticee, which has been referred to paragraph no. 22 of the decisions of R.A. Castings Private Ltd, which has not been gone into by the respondents. The whole show cause notice is based upon presumptions and surmises. The burden of proof lies upon the respondents that there is clandestine removal of finished product, which has not been discharged, at all, by the respondents.4
● Counsel appearing for the petitioner has relied upon the decisions which are as under:
(a) R.A. Castings decisions reported in 237 ELT 674, which is confirmed by the Division Bench of Allahabad High Court reported in 2010(1) taxman.com. 342 (Allahabad), against which SLP preferred by the department, has also been dismissed; and
(b) W.P. No. 173 of 2014 decided on 22.04.2014 by the Calcutta High Court.
● Counsel for the petitioner has pointed out that in several similarly situated cases, in which Dr. N.K. Batra report has been referred and relied upon, for proving clandestine removal of the finished products, in the show cause, ultimately in the OrdersinOriginal, the show cause notices have been dropped by the adjudicating authority itself. The similarly situated cases are as under:
(a) Globe Steel & Alloys Pvt. Ltd, the OrderinOriginal :02/Central Excise/commr /2015 dated 31.03.2015, copy whereof has been given by the counsel to the counsel for the respondents.
(b) M/s. Madhura Ingots & Steel Co. Pvt. Ltd. OrderinOriginal:07/ Central Excise/commr/2015 dated 19.05.2015.
(c) M/s. Jagannath Cement Works Pvt. Ltd being OrderinOriginal:31/ Denovo/Commr/2015 dated 15.12.2015.
(d) M/s. Kamsa Steel Pvt. Ltd. being OrderinOriginal:33/ commr/2015 dated 21.12.2015, and several other orders, copies of which have been given to the respondents.
● On the basis of aforesaid decisions, it is submitted by the counsel for the petitioner that electricity consumption pattern, is useless argument, on behalf of the respondents. Every now and then, such argument has been canvassed, in the OrderinOriginal and the first adjudicating authority has dropped the baseless 5 notice and whenever the first authority has confirmed such ground, the tribunals have passed the Orders and quashed such ground, like in the case of R.A. Castings Pvt. Ltd Vs. CCE, which is approved by the Allahabad High Court and SLP has been dismissed by the Hon'ble Supreme Court. It is further submitted that whenever OrderinOriginal are passed as stated herein above, dropping the show cause notice, the same are placed before the committee, consisting of two chief commissioners and they are taking decisions, whether to prefer any further appeal or not and all aforesaid cases where the show cause notice has been dropped and the ground of the electricity consumption pattern has also not been approved, in the OrderinOriginal, no appeal has been preferred by the department. Thus, it has become fashion with the respondent that arbitrarily in few cases, ground of Dr. N.K. Batra will be raised for few industries and for rest of the industries, no such ground is ever raised. Because of this N.K. Batra's report, several petitions have been filed and several decisions have to be given by the Courts.
4. Arguments canvassed by the counsel for the respondents:
● Counsel for the respondents submitted that the petitioner is having efficacious and alternative remedy against the OrderinOriginal and the appeal could have been preferred before the Central Excise and Service Tax Appellant Tribunal (CESTAT) under Section 35(B) of the Central Excise Act, 1944. In fact, appeal was preferred, but, was dismissed on the ground of limitation. ● Counsel appearing for the respondents submitted that Dr. N.K. Batra's report is not an only ground as mentioned in the showcause notice. Similarly, other grounds have also been dealt with in detail, in the OrderinOriginal. ● It is further submitted by counsel for the respondents that proper opportunity of being heard was given to the petitioner and only thereafter the Orderin Original dated 29th February, 2008 was passed by the Additional Commissioner, 6 Central Excise and Service Tax, Jamshedpur.
R E A S O N S
5. Having heard counsels for both the sides and looking to the facts and circumstances of the case, we, hereby, quash and set aside the OrderinOriginal th dated 29 February, 2008 (Annexure1 to the memo of this writ petition) mainly for the following facts and reasons:
(i) Showcause notice was given by the respondents on th 30 March, 2007 for the period running from 200405 to 200506 mainly on the ground that there is unrealistic electricity consumption. On this ground, the showcause notice has been given by the Additional Commissioner, Central Excise and Service Tax, Jamshedpur.
(ii) In the showcause notice, Dr. N.K. Batra's report has been referred to and relied upon. Moreover, there is also reference of Nucleus Group report as well as there is a reference of All India Induction Furnace Association report.
(iii) Counsel appearing for the petitioner has relied upon several decisions, as stated hereinabove. It ought to be kept in mind by the respondents that the electricity consumption pattern can be a corroborative ground and not a substantive ground at all. Thousands of possibilities cannot be equated with one truth. The grounds, which are referred in the OrderinOriginal, are in fact leading the respondents towards the highest probabilities and nothing beyond that to suspect that there is clandestine removal of the finished product by the noticee.
(iv) Nonetheless, for exact proof of unaccounted manufacturing of finished products and for clandestine removal thereof, more labour was required to be done by the respondents. It has become fashion with the respondentsdepartment to rely upon a document, since 2003 onwards, 7 which is known as report given by Dr. N.K. Batra, socalled Professor of IIT, Kanpur.
(v) Right from 2003 onwards, in not a single matter decided by the Commissioner or by the Tribunal or by any adjudicating authority, the department has produced Dr. N.K. Batra for cross examination by any assessee in whole of India. Nobody knows the authenticity of Dr. N.K. Batra's report. Nobody is error proof authority much less Dr. N.K. Batra.
Hence, his cross examination is must. His report is not a conclusive piece of evidence as per Indian Evidence Act, 1972. Veracity of the report given by Dr. N.K. Batra could be made by allowing his cross examination which is a touch stone of correctness.
(vi) Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like
(a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records.
(b) Manufacturing of finished product with the help of the aforesaid raw material, which is not mentioned in the statutory records.
(c) Quantity of the manufacturing with reference to the capacity of production by the noticee unit.
(d) Quantity of the packing material used.
(e) The total number of the employees employed and the payment made to them.
8
(f) Ostensible discrepancy in the stock of raw materials and the finished product.
(g) Clandestine removal of goods with reference to entry/exit of vehicles like Trucks etc in the factory premises.
(h) If there is any proof about the loading of the goods in the Truck, like weight of truck etc. at the weighbridge, security gate records, transporter documents such as lorry receipts, statements of the truck drivers, entries of the trucks/vehicles at different checkpost. different types of forms which are supplied by the Commercial Tax Department, like Road Permit supplied by the commercial tax department, receipts by the consignees etc. This list of evidences to be collected, is not exhaustive. Still there can be similar type of evidences. These documents ought to have been collected by the respondentdepartment, if at all, they are interested in collection of the correct central excise duty from the noticee upon whom or upon which, allegation of clandestine removal of the finished product is levelled. The electricity consumption report like Dr. N.K. Batra report can hardly be treated as a substantive evidence. Time and again, the decisions have been given by the tribunals, but, the respondents departments are turning deafear to . In this case, the respondents are relying upon Dr. N.K. Batra's report. All these are nothing but the possibilities, for clandestine removal, but, for proving the clandestine removal, the substantive piece of evidence is must. Few such evidences have been referred by this Court. The list of these evidences is not exhaustive: [I] The department should have collected the proof of 9 amount received from the consignees, statement of consignees, receipts of sale proceeds by the consignor and its disposal.
(vii) As no adequate opportunity of crossexamination has been given to the petitioner, there is violation of principles of natural justice, hence, this writ petition is entertained at this stage. It has been held by Hon'ble Supreme Court in the case of 'Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors', reported in (1998) 8 SCC 1, in paragraph no. 14 and 15, which reads as under: "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose".
15. Under Article 226 of the Constitution , the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of caselaw on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field".
(emphasis supplied) In view of the aforesaid decision, If there is a violation of principle of natural justice, writ is always tenable at law.
(viii) Thus, the department has not done any home work and the show cause notice dated 30th March, 2007 has been issued. This type of short cut should not have been followed by the department. There is no shortcut for success. The aforesaid documents and evidences could have been collected very easily by the department, if at all, department is of the opinion that there is a clandestine removal of finished product viz 10 M.S. Ingots by the petitioners.
(ix) The respondents have also been given time and again the guidance by various decisions that whenever they are relying upon the electricity consumption pattern, experiment in the very same unit ought to have been carried out for manufacturing of 1 MT of the finished product or for at least 1000 such unit, if any other product is involved, so that average consumption of electricity can be accurately measured by the respondent department. Electricity consumption, which is based upon Dr. N.K. Batra's report is absolutely useless, with reference to the units for which allegation is levelled for clandestine removal without carrying out any experiment of consumption of electricity in the very same unit. Hence, we, hereby direct the respondents, henceforth not to use Dr. N.K. Batra report against any noticee especially when the department is levelling allegations of clandestine removal of finished products, unless, the experiment of consumption of electricity is carried out at the factory premises of the very same assessee/noticee. The consumption of the electricity depends upon the efficiency of the machines also. It also depends upon the fact whether the noticee is utilizing obsolete machinery or modern machinery. Dr. N.K. Batra might have carried out experiment in a factory where there may be efficient machinery, whereas machines used by the noticee may not have the same efficiency. Therefore, cross examination of Dr. N.K. Batra is must. Department can use the report of Dr. N.K. Batra's as the guidelines and nothing beyond that. Department has to bring its own experts at the factory premises of the noticee. Department must carry out an experiment of the consumption of the electricity at the manufacturing place of the noticee either for 1 MT or for 1000 unit etc. so that, the electricity consumption pattern can be 11 measured for the very same machinery and thereafter it can be compared with the quantity of the finished products mentioned, in the books of accounts, with the electricity bills of the noticee. This exercise is must before issuing the show cause notice by the respondentdepartment ,whenever the department is levelling allegation of clandestine removal on the basis of electricity consumption pattern. Instead of doing this exercise, straight way, Dr. N.K. Batra's report has been relied upon, which has no relevance with the factory premises of the noticee. Hence, such report shall not be relied upon by the respondents, unless the aforesaid experiment is carried out at the factory premises of the noticee. This is not a first case in which such guidelines has been given. Observations made in paragraph Nos. 20.1, 20.2, 21, 22.1, 23 & 24 of the decisions rendered by the Tribunal in the case of R.A. Castings Pvt. Ltd. Vs. CCE, reported in 237 ELT 674 read as under: "20.1 From the perusal of these reports, we find that wide variations in the consumption of electricity have been reported for the manufacture of one MT of steel ingots. This renders the norm of 1046 units adopted by the Revenue as arbitrary. Why not adopt the norm of 1800 KWH/T or 1427 KWH/T or 650 to 820 units/MT or 851 units/MT as per various reports referred to above or why not adopt some figure between 555 to 1046 units as norm as per Dr. Batra's report? 20.2 We note 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. It is the basic philosophy in the taxation matters that no tax can be levied on the basis of estimation. In this case, there is added problem. Estimation of production fluctuates widly depending upon the fact as to which report is adopted. Tax is on manufacture and it is to be proved beyond doubt that the goods have been actually manufactured, which are leviable to excise duty. Unfortunately, no positive evidence is coming on record to that effect. Article 265 of the Constitution of India says that no tax shall be levied or collected except by authority of law. Unless the manufacture of the steel ingots is proved to the hilt by authentic, reliable and credible evidence, duty cannot be demanded on the basis of hypothesis and theoretical calculations, without taking into consideration the ground realities of the functioning of the factories. High consumption of electricity by itself cannot be the ground to infer that the factories were engaged in suppression of production of steel ingots. The reasons for high consumption of electricity in the case of the appellants' factories have not at all been studied and analysed by the Revenue independently. Instead, the norm of 1046 units fixed as per Dr. 12 Batra's report has been blindly applied to the appellants' cases to work out the excess production. This approach is flawed and does not have sanctity.
21. The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons 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. Therefore, there can be no generalization nor any uniform norm of 1046 units as sought to be adopted by the Revenue especially when there is no norm fixed under Rule 173E till date by the Revenue and notified by it. 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 . There is, therefore, no universal and uniformly acceptable standard of electricity consumption, which 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. In the following case laws, it has been held that the consumption of the electricity alone is not sufficient to determine the production;
(i) Pure Enterprises (P) Ltd. v. CCE, Rajkot 1999 (111) E.L.T. 407 (Tri.)
(ii) Kapadia Dyeing Bleaching and Finishing Works v. CCE, Surat 2000 (124) E.L.T. 821 (Tri.)
(iii) A. Arti Leathers (P) Ltd. v. CCE and C, Ahmedabad2001 (136) E.L.T. 1255 (Tri.Mum.)
(iv) Parshuram Cement Ltd. v. CCE, Lucknow 2003(160)E.L.T. 213 (TriDel.)
(v) Mukesh Dye Works v. CCE, MumbaiVI 2006 (196) E.L.T. 237 (tri.Mum.)
(vi) Hans Castings Pvt. Ltd.v. CCE, Kanpur 1998 (102) E.L.T. 139 (T)
(vii) M/s. Padmanabh Dyeing and Finishing Works v. CCE, Vadodara 1997 (90) E.L.T. 343 (T)
(viii) M/s. Madhu Products v. CCE, Hyderabad 1999 (111)E.L.T. 197 (T).
22.1 For want of evidence relating to the above points, clandestine removal cannot be sustained merely on the basis of the technical opinion report of Mr. Batra. In this connection, the following case laws are relied:
(i) Emmtex Synthetics Ltd. v. Commissioner of Central Excise, New Delhi reported in 2003 (151) E.L.T. 170 (Tri.Del.);
(ii) Commr. of Central Excise, Chennai v. Dhanavilas (Madras) Snuff Co. reported in 2003 (153) E..T. 437 (Tri.Chennai);
(iii) Commissioner of Central Excise, Madurai v. Madras Suspensions Ltd. reported in 2003 (156) E.L.T. 807 (Tri. Chennai);
(iv) Commissioner of Central Excise, Coimbatore v. Sangamitra Cotton Mills (P) Ltd. reported in 2004 (163) E.L.T. 472 (Tri Chennai);
(v) Commissioner of Central Excise Coimbatore v. Velavan Spinning Mills reported in 2004 (167) E.L.T. 91 (Tri.Chennai);
(vi) M. Veerabadhran and others v. Commissioner of Central 13 Excise, ChennaiII reported in 2005 (182) E.L.T. 389(T)= 2005 (98) ECC 790 (T).
23. The Tribunal has consistently taken the view that wherever electricity consumption alone is adopted as the basis to raise demands, the order of the lower authorities have been held to be unsustainable in law and set aside and the Revenue had been directed to carry out experiments in different factories on different dates to arrive at the average to be adopted as a norm, which can be followed thereafter and the Revenue in the present case not having conducted any experiment whatsoever cannot be permitted to justify the demands raised. It will be appropriate on the part of the Revenue to conduct experiments in the factory of the appellants and others and that too on different dates to adopt the test results as the basis to arrive at a norm, which can be adopted for future. The impugned demand based merely on assumptions and presumptions cannot, therefore, be sustained nor could be justified both on facts and in law.
24. The law is well settled that in every case of alleged clandestine removal, the onus is on the Revenue to prove what is alleges with positive and concrete evidence. In the absence of any positive evidence brought by the Revenue to discharge its onus, the impugned order cannot be sustained."
(emphasis supplied)
(x) The aforesaid decision has been upheld by the Division Bench of Allahabad High Court in a decision reported in 2010(1) taxman.com 342 (Allahabad) and SLP preferred against the said decision has also been dismissed by the Hon'ble Supreme Court. Thus, the report of Dr. N.K. Batra has been several times, criticized by various adjudicating authority visavis clandestine removal and the respondentdepartment has also issued a circular dated 26.06.2014 and several times such notice has also been dropped while passing the Order in Original, as stated herein above, as pointed out by the counsel for the petitioner. Despite these facts, in violation of such directions and the circular of the department, the respondents are still issuing show cause notices, levelling allegations of clandestine removal of the finished product, based upon the electricity consumption pattern shown by Dr. N.K. Batra. We, therefore, direct the respondents not to mention Dr. N.K. Batra's report in their show cause notice unless an experiment is carried out by the respondent department in the factory premises of the noticee for production of 1 MT 14 or for production of more than sufficiently large quantity like 1000 units etc. in any other cases, because electricity consumption depends upon the nature of machinery. Even two refrigerators of same kind and type and capacity may not have the same consumption of electricity, because one may be new and another may be old.
(xi) Likewise such type of other reports are also available in this country, which are as under:
(a) Dr. N.K. Batra's report
(b) Report by Joint Plant Committee constituted by the ministry of steel, Government of India.
(c) Report of NISST, Mandi Gobindgarh given in JuneJuly, 2006.
(d) Report of Executive Director, All India Induction Furnace Association, New Delhi, and all these reports say different electricity consumption, per ton. These facts have been referred in paragraph nos. 19 & 20 of the decision reported in 237 ELT 674 and the same reads as under : "19. The main question to be decided in the instant appeals here is whether the appellants during the period December 2001 to March, 2005 have actually manufactured M.S. Ingots in excess of what has been recorded in their statutory records and removed the said quantity clandestinely from their factory without payment of duty. The excess production has been worked out on the basis of electricity consumption for which the standard norms are imported from report of late Mr. N.K. Batra, Professor of Material and Metallurgical Engineers, IIT Kanpur.
20. We find that the following reports have been referred to either by the appellants or the Revenue laying down the norms for the consumption of electricity for the manufacture of one MT of steel ingots:
(i) 555 to 1046 (KWH/T) as per Dr. Batra's report;
(ii) 1800 KWH/T as per the report by Joint Plant Committee constituted by the Ministry of Steel, Government of India;
(iii) 1427 KWH/T as per the report of NISST, Mandi, Gobindgarh given in JuneJuly, 2006;
(iv) 650 units to 820 units/MT as per the Executive Director, All India Induction Furnace Association, New Delhi;
(v) 851 units/MT in the case of Nagpal Steel v. CCE, Chandigarh reported in 2000 (125) E.L.T. 1147".
(emphasis supplied) In view of the aforesaid electricity consumption report, per tonnage, it appears that the variation is from 555 units to 1800 kWH/Per Ton. This 15 is mainly because of the nature of the machinery utilized by the noticee. Looking to the facts of the present case, the electricity consumption pattern as has been given in Annexures B1 & B2, as stated in paragraph 3 of the show cause notice, which reveals that this petitioner has consumed electricity nearly in consonance with the report given by Joint Plant Committee, constituted by the Ministry of Steel, Government of India and for few months it is even less than that. Thus, there are varieties of report available in the markets, one could not have been chosen by the respondents, arbitrarily, without carrying out the experiment of consumption of electricity for one ton of manufacturing at the noticee's manufacturing unit. This type of experiment is a must by the department, whenever respondents are canvassing the ground of electricity consumption pattern visavis clandestine removal of finished products. Otherwise, without such experiment, if any one of the aforesaid report relied upon, then it is arbitrariness on the part of the respondents and whenever there is any arbitrariness, there is always violation of Article 14 of the Constitution of India because for few of the noticees such type of reports are not relied upon whereas for rest of the assessee, as per the choice of the respondents, such type of reports will be relied upon and in fact, this has happened in this case. Several OrdersinOriginal have been pointed out during the course of arguments by the counsel for the petitioner wherein electricity consumption pattern allegation levelled in show cause notice and ultimately after adjudication, the show cause notice has been dropped. Thus, without experiment is being carried out at the premises of the noticees, use of any of the committee's report for electricity consumption pattern always leads to arbitrariness on the part of the respondentdepartment. Whenever arbitrariness is present, equality 16 is absent. Equalities and arbitrariness are strong enemies of each other. When equality is present, arbitrariness is absent.
6. Hence, this Court is remanding the matter to the Additional Commissioner, Central Excise & Service Tax, Jamshedpur. This Court is not much going into detail of further arbitrariness in the OrderinOriginal. There appears to be very high sounding reasons, but, if they are viewed with zoom lens camera, it appears that nothing is proved by the respondents.
7. The OrderinOriginal is based upon mere presumptions and possibilities, and, nothing has been proved at all by the respondents, especially unaccounted manufacturing of M.S. Ingots and the clandestine removal thereof.
8. The documents which are referred to in the show cause notice and relied upon, should have been supplied to the petitioner. These documents have been referred in the show cause notice dated 30th March, 2007 (AnnexureA). Imaginary is the basis of the show cause notice and without proof, the Orderin Original has been passed in the same breath.
9. We, therefore, quash and set aside the OrderinOriginal passed by the Additional Commissioner, Central Excise & Service Tax, Jamshedpur dated th 29 February, 2008 (Annexure1 to the memo of this writ petition) .
10. As a cumulative effect, as the OrderinOriginal passed by the Additional Commissioner, Central Excise & Service Tax, Jamshedpur dated 29th February, 2008 (Annexure1 to the memo of this writ petition) is quashed and set aside, the matter is remanded for adjudication of the show cause notice dated th 30 March, 2007 and the matter will be decided afresh, keeping in mind the aforesaid principles, especially if the respondents are relying upon Dr. N.K. Batra's report, the experiment shall be carried out at the premises of the petitioner, as stated hereinabove, for manufacturing of one ton or any such quantity which should be sufficiently large, so as to understand the pattern of 17 consumption of electricity for manufacturing of M.S. Ingots as well as keeping in mind the nature of evidences as referred in para 5(vi) may also be collected as far as possible.
11. Accordingly, this writ petition is allowed and disposed of.
12. In view of final disposal of the writ petition, I.A. No. 2561 of 2014 is also disposed of.
(D.N. Patel, J.) (Ratnaker Bhengra, J.) Ajay/ A.F.R.