Allegation of clandestine removal not sustainable merely for high consumption of electricity

Orange City Alloys Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Mumbai)

Facts- The Department had gathered information that the appellant No.1 was evading the payment of Central Excise duty through suppression of production in their statutory records and clearing the same without payment of Central Excise duty. The Central Excise officers made simultaneous visits to the factory premises of appellant No.1 and premises of M/s. A. B. C. Weighbridge, Nagpur on 25.10.2005.

During visit, the officers resumed certain records under withdrawal memo and Panchnama both dated 25.10.2005 drawn at respective premises for further verification. On 24.03.2006, the officers of department conducted two heats in the factory of the appellant No.1, which showed the electricity consumption of 1008 units per MT and 1058 units per MT. The officers also recorded the statement dated 18.03.2008 from the appellants No.3 & 4.

Upon detailed investigation into the matter, the department had concluded that the appellant No.1 had suppressed the production of ingots and removed the same without payment of Central Excise duty. Accordingly, show cause proceedings were initiated by the department against all the appellants, proposing confirmation of the Central Excise duty demand along with interest and for imposition of penalties.

Conclusion- We find there are different judicial forums who has held that high consumption of electricity by itself not a ground to infer suppression of production. The onus is on the department to prove allegation of clandestine removal with positive and concrete evidence.

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