Commissioner of Central Excise Vs Saravana Alloy Steel Private Limited (Karnataka High Court)
The Karnataka High Court dismissed the Revenue’s appeal and upheld the Customs, Excise and Service Tax Appellate Tribunal’s (CESTAT) order relating to allegations of clandestine manufacture and removal of excisable goods by a steel manufacturer. The Revenue had challenged the Tribunal’s decision, which had set aside excise duty demands, penalties and related findings arising from three show cause notices issued for different periods. The dispute concerned allegations that the assessee had clandestinely manufactured and cleared steel ingots and CTD bars without payment of central excise duty. The Revenue relied principally on excess electricity consumption, expert reports on power consumption norms, statements of various persons, invoices, computer data and allegations of unaccounted procurement of scrap to support its case.
Before the High Court, the Revenue argued that the Tribunal had ignored expert opinions indicating the quantity of electricity required for manufacturing steel products and had failed to appreciate corroborative evidence such as statements of scrap dealers, transporters, company officials, invoices, loose slips and computer records allegedly establishing clandestine removal of goods. The assessee, on the other hand, contended that the Commissioner’s findings were based primarily on estimated power consumption norms without conducting any trial production at the factory and without considering the plant’s specific furnace capacity, age and operational conditions. It was also argued that the statements relied upon by the Department had been retracted and that several documents, including loose slips, lacked authenticity and could not establish clandestine manufacture.
