KHANDELWAL CEMENTS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this Appeal M/s. Khandelwal Cement Ltd. are challenging the demand of duty on slag cement and imposition of equivalent amount of penalty under Section 11 AC of the Act.

(2.) SHRI . P.R. Mullick, learned Chartered Accountant submitted that the Appellants manufacture cement; that the allegation in the show cause notice is that they have purchased 407.795 MT and 476.850 MT. of Slag from Malvika Steel Ltd. for manufacturing the cement and by consuming the said slag, slag cement have been manufactured and cleared without payment of duty; that Shri Murari Lal Sharma, General Manager in his statement dated 21.8.98, submitted that the slag is added to clinker to manufacture slag cement; that however, in his another statement dated 29.1.99 Shri Murari Lal Sharma, deposed that the Appellants are not using the slag and in the earlier period of slag was being used during trial production and now they are only manufacturing ordinary Portaland cement. He, further, submitted that the Appellants have produced one to one correlation as per books of accounts and audited statement of accounts; that the confusion has been caused on account of statement dated 29.1.99 of Murari Lal Sharma; that he had mis -stated the fact that slag was only purchased during trial runs and slag was purchased only from Malvika Steel whereas the corroboration with books of accounts and consumption of all inputs shows otherwise; that this was because of the fact that they had only the licence to manufacture ordinary Portland cement 33 grade from the Department of Industrial Policy and Promotion; that they did not have the licence to manufacture slag cement; that, however, they were in fact manufacturing slag cement and for this reason the statement of Shri Murari Lal Sharma was guarded one as lest some problem may occur with the Department of Industrial Policy and Promotion; that now as their until has been closed, they are truthfully deposing the fact before the Tribunal. He mentioned that the appellants had never suppressed production nor effected clandestine removal, no Modvat credit was availed by them in respect of slag as they were not licensed to manufacture slag cement. He also contended that as per Board's Circular No. 65/81 -CX -6 dated 28.8.91, the principle raw material in respect of cement are limestone and gypsum in respect of which Form IV, account was maintained by them; that the record of slag was maintained in regular books of accounts as they were not statutily required to be maintained; that they had in their letter dated 14.2.97 declared that slag would be used as raw material and had declared manufacture of slag cement in Declaration filed under Rule 173 B of the Central Excise Rules. The learned Chartered Accountant therefore, submitted that no duty liability, separately on account of slag consumed, arises against them.

(3.) HE finally submitted that if such a huge quantity of cement was manufactured and removed clandestinely, there ought to be positive evidence with the Department to establish the trucks for transport, the name and address of the consignees, the detail and record of the same, that since no proof whatsoever is adduced by the Revenue, the demand cannot be confirmed against them on the alleged clandestine manufacture and removal. He relied upon the decision in the case of Manu Bhai U. Patel v. CCE, Rajkot 2002 (142) ELT 53 (Tri) where it has been held that "whenever the charge of clandestine removal is made, the Department has to prove that assessee has procured all the raw materials required for the manufacture of final products; the assessee have utilized human resources in the form of labour and paid that much wages for the production of the quantity of units which have been confirmed in the Order -in -original as produced, what is the optimum electricity consumed for producing the quantity that is sought to be added to the production ........ The expenditure of actual amount on transportation of goods to the customers place." He also contended that extended period cannot be invoked for the demand as all the facts were in the knowledge of the Department.