Judgment:
S.S. Kang
When the case was called, none appeared on behalf of the appellant in spite of notice. The appellant filed appeal along with application for waiver of dues on 6.6.2011 and the application for waiver of dues was adjourned twice at the request of the applicant. As none appeared on behalf of the applicant in spite of notice, therefore the application for waiver of dues is being taken up in absence of the applicant.
2. Heard the learned Additional Commissioner (AR).
3. The applicant filed this application for waiver of pre-deposit of duty of Rs.23,44,990/-, interest and penalty. The applicant is engaged in the manufacture of MS flats/angles/rounds/bars. The officers of the Revenue visited the factory premises of the applicant on 12.12.2008 and a test run was conducted. On the basis of the test run, it was found that 19.555 kgs. of finished goods were manufactured by consuming 1 KW of electric power. On the basis of this and other evidence on record, the demand is confirmed by the adjudicating authority after issuing a show cause notice. The adjudicating authority has also taken into consideration that during the period 2007-09, the applicant was selling their goods below the cost price, even at a loss of more than Rs.3,000/- per MT.
4. Against the adjudication order, the present applicant filed appeal before the Commissioner (Appeals) along with application for waiver of dues. The Commissioner (Appeals) directed the applicant to deposit the amount of duty for hearing of the appeal. As the applicant failed to comply with the conditions of the stay order, the appeal filed by the applicant was dismissed for non-compliance with the provisions of Section 35F of the Central Excise Act.
5. In the grounds of appeal, the contention of the applicant is that the demand cannot be confirmed on the basis of test run conducted for two hours in absence of any evidence regarding procurement of the unaccounted raw material or clearance of finished goods without payment of duty. The applicant also submitted that the finished goods are manufactured with the help of number of machines installed in the factory. A manufacturer always wants that all the machines should run to its optimum level. However, such idle situation does not exist throughout the time. The applicant also submitted that there are other ancillary machineries installed in the factory, which also consume electricity. The applicant is filing necessary statutory returns with the Revenue showing the clearance of the goods on payment of appropriate duty, which were accepted during the period in dispute, therefore the allegation of suppression with intent to evade payment of duty is not sustainable hence the major part of the demand is time barred.
6. The Revenue submitted that the applicant has not raised any objection to the result of the test run conducted in the factory and the demand is confirmed after taking into consideration the power consumption for the manufacture of the finished goods on the basis of the test run. It is also submitted that in a similar situation, the Tribunal in the case of Jai Bharat Steel Rolling Mills in appeal No. E/1654/10, vide stay order dated 14.2.2012, directed the assessee to deposit an amount of Rs.38 lakhs against the demand of Rs.1,50,00,000/- which was confirmed on the ground of suppression of the production. The contention is that the Tribunal followed the decision of the Hon’ble Bombay High Court in the case of Orange City Alloys Pvt. Ltd. whereby the Hon’ble High Court, vide order dated 23.11.2011, modified the stay order passed by the Tribunal holding that the assessee is liable to pay 25% of the duty for hearing of the appeal.
7. In this case the demand is on the basis of test run conducted in the factory in the presence of the authorized signatory of the applicant. In addition to this evidence, there is evidence on record to show that the applicant is declaring the assessable value even below the cost of production. We find that the Tribunal in the case of Jai Bharat Steel Rolling Mills, after relying upon the decision of the Hon’ble Bombay High Court in the case of Orange City Alloys Pvt. Ltd. vs. CCE, dated 23.11.2011, directed the assessee to deposit Rs.38,00,000/- against the demand of Rs.1,50,00,000/- confirmed on the ground of suppression of production. In view of the above, we find that the applicant has not made out a case for total waiver of duty. However, keeping in view the facts and circumstances of the case, the applicant is directed to deposit an amount of Rs.7,50,000/- (Rupees seven lakhs fifty thousand only) for hearing of the appeal. On deposit of the above mentioned amount, the pre-deposit of the remaining dues is waived for hearing of the appeal.
8. As noted above, the Commissioner (Appeals) has not decided the appeal on merits and the appeal filed by the appellant was dismissed by the Commissioner (Appeals) for non-compliance with the conditions of the stay order, therefore the impugned order is set aside and the matter is remanded back to the Commissioner (Appeals) to decide the appeal afresh on merits, on showing the pre-deposit of the above mentioned amount, and after affording an opportunity of hearing to the appellant. The appeal is allowed by way of remand.