By TIOL News Service

MUMBAI, AUG 19, 2014: THE churning process undergone in this case is undoubtedly unparalleled.

All the appellants are engagedin the manufacture and sale of MS Ingots. They used induction furnaces for melting sponge iron/MS scrap for manufacturing their final product viz. ingots for which they consumed electricity received from the Maharashtra State Electricity Board.

It is the case of the Revenue based upon the study conducted by Dr. N.K. Batra, Professor of IIT, Kanpur and the opinion given by All Indian Induction Furnace Association that the appellant had clandestinely manufactured and cleared the final product MS ingots without payment of duty.

Vide different adjudication orders the demands running into crores of rupees were confirmed with interest and penalties were also imposed.

At the stay stage also, the matter had to take a trip to the High Court 2011-TIOL-695-HC-MUM-CX against the order of the CESTAT 2011-TIOL-288-CESTAT-MUM ordering deposit of 50% of the duty demanded and 25% of the Penalty. Subsequently due to a difference in opinion the Stay applications were heard by a third Member pursuant to which pre-deposit was waived in its entirety & Stay was granted 2013-TIOL-1945-CESTAT-MUM.

When the appeals were finally heard the Vice President observed that the case of the Revenue is on the basis of electric consumption only. After noting that the evidence relied upon in the SCNs and in the adjudication orders is the same as in the case of R.A. Castings Pvt. Ltd 2008-TIOL-2732-CESTAT-DEL viz. opinion of Dr. N.K. Batra and All India Induction Furnace Association and the same opinion is taken into consideration for confirming the demands and since similar demand was set aside by the Tribunal in the case of R.A. Castings Pvt. Ltd the ratio of said decision is fully applicable to the facts of the present cases and hence the orders are required to be set aside and the appeals are to be allowed.

The Member (T) had a differing view. Holding that there was no doubt that the appellants were not doing self-assessment truthfully and contents of monthly returns were not truthful and they were indulging in suppression of production and, therefore, evading duty& hence extended period of limitation is correctly invoked and penalties on the assessees are correctly imposed, the Member (T) upheld the impugned orders and dismissed all the appeals.

Accordingly, the matter came to be referred to the Third Member for a Majority view. See 2014-TIOL-582-CESTAT-MUM.

More interesting developments took place in this regard and which can be read at 2014-TIOL-465-HC-MUM-CX & 2014-TIOL-533-HC-MUM-CX.

Finally, the matter was heard by the third Member (Judicial), Shri M.V. Ravindran and the short point before him was –

(a) Whether in view of the discussion in para 1 to 31 and in view of the decision of the Tribunal in the case of R.A. Castings Pvt Ltd (supra) the impugned orders are to be set aside and the appeal allowed;

OR

(b) Whether in view of the discussion in para 32A-68 above and in view of the Hon'ble Supreme Court's judgment in the case of Triveni Rubber and Plastics (supra) and this Tribunal's decision in the case of Rattan Steels Works (supra), Nagpal Steel Ltd (supra) and Hans Casting Pvt Ltd (supra), the impugned orders are to be upheld and all the appeals dismissed.

Pursuant to the marathon hearing sessions held in the second week of June, 2014 the Member (Judicial) concluded thathe concurred with the findings of the Vice President and in his opinion, the judgment in R.A. Casting (supra) would be squarely applicable in the facts of the instant case in all the appeals inasmuch as the demand was based mainly on the evidence of power consumption without any evidence of clandestine removal and, therefore, cannot survive.

So, in view of the Majority view, the orders confirming duty demands of crores of rupees were set aside and the appeals were allowed.

(See 2014-TIOL-1530-CESTAT-MUM)