AMBUJA CEMENT EASTERN LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants were issued a show -cause notice raising demand of duty of Rs. 2,56,88,171/ - on the alleged clandestine manufacturer and removal of the cement being manufactured by them. The Commissioner vide his impugned order dropped the major portion of the demand of duty of Rs. 2,25,73,281/ - raised against the appellants on the basis of railway documents inasmuch as the same were fully explained by the appellants and the adjudicating authority was satisfied about the same. However, he confirmed the demand of duty of Rs. 31,14,890/ - on the findings of the clandestine manufacture and removal of the cement, which in turn are based upon the allegation that during the relevant period, there was deficient production of 9340 MT in comparison to the raw materials consumed by the appellants. Hence, the Commissioner has concluded that the appellants have clandestinely cleared 9340 MTs of cement. He has also imposed penalty of Rs. 3,00,000/ - under the provisions of Rule 173Q and 226 of Central Excise Rules, 1944. Shri B.N. Chattopadhyay, ld. Consultant appearing for the appellants, submits that the Revenue has compared the raw materials consumption for the period April 1991 to December 1991 to the raw materials consumption during the earlier period. In respect of they earlier period, as the appellants were not availing the benefit of modvat credit on the raw materials received by them, the same were being entered in their Form IV records on "dry" basis, after deducting the moisture content. He explains that the raw materials i.e. slag and fly ash contained a lot of moisture in them and inasmuch as during the relevant period, there was no duty on slag and no modvat credit was being availed by them, the quantity entered in their raw material account was less than the quantity shown in the documents. As regards the gypsum, the appellants started availing the benefit of the modvat credit and entered the same quantity in their RG 23A Part I register as reflected in duty paying documents. In the duty paying documents, the weight of the gypsum was being shown in wet condition i.e. including moisture. The existence of moisture in gypsum contributes to the difference of 9340 MT.

(2.) HE further contends that the entire allegation of the clandestine manufacture and removal is based on certain calculation of the raw materials and the expected out -put, which the appellants have explained satisfactorily. There is no other evidence with the Revenue to show that how the appellant has produced high quantity of cement. In the absence of any corroborative evidence, the confirmation of demand of duty on the basis of input and output ratio, is not justified.

(3.) WE have also heard Shri T.K. Kar, ld. SDR for the Revenue who reiterates the reasoning of the Commissioner in his impugned order. We agree with the submissions made by the ld. Consultant that in cases of clandestine removal, positive and tangible evidence showing such an activity on the part of the assessee is required to be produced by the Revenue. The appellants have strongly denied such charges and have also explained that the comparison of the consumption of input and expected output of cement with the earlier year is not justified inasmuch as in the earlier year, they were recording their input on "dry" basis as they were not availing any modvat credit. With the availment of modvat credit during the material period, the entire quantity of raw materials as reflected in duty paying documents, was being shown by them in their RG 23A Part I. This fact by itself is sufficient to explain the alleged difference in the production of cement. We also note that the Tribunal's decision in the case of CCEx. Allahabad v. Varanasi Bottling Co. reported in, 2003 (54) RLT 286 CEGAT -new Delhi) laying down that no findings of clandestine manufacture and removal can be arrived at the standard formula indicating input, output ratio. As there is no other evidence on record to show the clandestine activity being undertaken by the appellants, we do not find any justification for holding against them. Accordingly, we set aside the impugned order and allow the appeal with consequential relief of the appellants.