Appeal Details
Counselvise Citation
12424514 RSA 2012
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 11 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-01-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
19-11-2013
Assessment Year
2007-2008
Appeal Filed On
23-01-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO S. 123 & 124 / P N/ 20 1 2 ASSESSMENT YEAR S : 2007 - 08 & 20 08 - 09 SRJ PEETY STEE LS PVT. LTD., D - 51/1, ADDL. MIDC AREA, JALNA - 431203 VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE - 1, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AAACT6742M ITA NO S. 435 & 436 /PN/20 12 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 THE ASSTT. COMMISS IONER OF INCOME TAX, CIRCLE - 1, AURANGABAD VS. M/S. SRJ PEETY STEELS PVT. LTD., D - 51, ADDL. MIDC, JALNA (APPELLANT) (RESPONDENT) PAN NO. AAACT6742M APPELLANT BY: SHRI J.P. BAIRAGRA RESPONDENT BY: SHRI SUNIL GANOO DATE OF HEARING : 30 - 10 - 2014 DATE OF PRONOUNCEMENT : 16 - 01 - 201 5 ORDER PER R.S . PADVEKAR , JM : - IN T HIS BATCH OF FOUR APPEALS, TWO ARE FILED BY THE ASSESSEE AND OTHER TWO APPEALS ARE FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER S OF THE LD. CIT(A) , AURANGABAD DATED 30 - 1 2 - 2011 FOR THE A.YS. 2007 - 08 AND 2008 - 09. THE FACTS AS WELL AS ISSUES ARE COMMON IN ALL THESE APPEALS . HENCE, THIS BATCH OF APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN THE A.Y. 2007 - 08, THE ASSESSEE HAS CHALLENGED THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S. 147 OF THE INCOME - TAX 2 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA ACT BY TAKING THE GROUND NOS. 1 AND 2. THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF ASSESSMENT ORDER BY TAKING PLEA THAT THERE WAS NO COMPLIANCE OF SEC. 143(2) AND H ENCE, ASSESSMENT ORDER IS BAD IN LAW. AT THE BEGINNING OF THE HEARING LD. AR FOR THE ASSESSEE SUBMITTED THAT AS PER THE INSTRUCTIONS OF THE ASSESSEE GROUND NOS. 1 AND 2 AS WELL AS GROUND NO. 11 ARE NOT PRESSED. AS THE GROUND NOS. 1, 2 AND 11 ARE NOT PRES SED, THE SAME ARE DISMISSED AS NOT PRESSED. 3. THE COMMON ISSUE IN BOTH THE APPEALS ARE THE ADDITION MADE BY THE ASSESSING OFFICER FOR ALLEGED SUPPRESSION OF PRODUCTION/ SALES OF RS.39,20,36,546/ - AND RS.40,75,72,486/ - IN THE A.YS. 2007 - 08 AND 2008 - 09 RE SPECTIVELY. SO FAR AS THE A.Y. 2007 - 08 IS CONCERNED THE ABOVE ISSUE ARISES FROM GROUND NOS. 3 TO 6, 8 AND IN A.Y. 2008 - 09 THE SAID ISSUE ARISES FROM GROUND NOS. 2, 3, 4 AND 6. 4. THE FACTS PERTAIN TO THE ABOVE ISSUE ARE AS UNDER. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING OF MS INGOTS/BILLETS. SO FAR AS A.Y. 2007 - 08 IS CONCERN ED , THE REGULAR ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 31 - 12 - 2009. AS NOTED BY THE ASSESSING OFFICER THE OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD ( IN SHORT REFERRED TO AS THE CCE, AURANGABAD) VIDE THEIR LETTER DATED 29 - 03 - 2010 INFORMED THE ASSESSING OFFICER THAT THE ASSESSEE HAD INDULGED IN MANUFACTURE OF FINISHED GOODS AND REMOVAL OF THE SAME WITHOUT PAYING EXCISE DUTY. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT T HE CCE , AURANGABAD ALSO SENT A COPY OF THE ADJUDICATION ORDER QUANTIFYING THE VALUE OF ALLEGED SUPPRE SSED PRODUCTION BY THE ASSESSEE WITHOUT PAYMENT OF EXCISE DUTY. 4.1 THE AS SESSING OFFICER HAS OBSERVED THAT INTELLIGENCE WAS GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI, IN THE CASE OF SHRI SALASAR ISPAT (PVT.) LIMITED AND MITC ROLLING MILLS (PVT.) LTD., MANUFACTURERS OF THERMO MECHANICALLY TWISTED (TMT) BARS, THAT THEY WERE INVOL VED IN 3 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA CLANDESTINE CLEARANCE OF FINISHED PRODUCTS THROUGH A BROKER, SHRI UMESH MODI, MUMBAI. AS NOTED BY THE ASSESSING OFFICER SEARCHES WERE CONDUCTED BY THE DGCEI ON 18 - 12 - 2006 AND VARIOUS INCRIMINATING DOCUMENTS WERE RECOVERED WHICH INDICATED CLANDESTIN E REMOVAL OF GOODS BY MANUFACTURERS OF TMT BARS BY MANUFACTURERS LOCATED AT JALNA. THE ASSESSING OFFICER ALSO REFERRED TO THE ADMISSION OF SHRI UMESH MODI BEFORE THE CENTRAL EXCISE AUTHORITIES THAT HE HAD ACTED AS A SUB - BROKER FOR SHRI ANIL D LINGADE, PRO PRIETOR OF ANIL TRADERS, JALNA AND SHRI MUKESH GUPTA, PROPRIETOR OF R.J. STEEL TRADERS, NAVI MUMBAI, WHILE SOURCING TMT BARS. AS NOTED BY THE ASSESSING OFFICER THE SAID SHRI ANIL D. LINGADE ADMITTED THAT HE ACTED AS A BROKER FOR THE NINE MANUFACTURERS FRO M JALNA WHICH DETAILS ARE GIVEN IN PARA NO. 2.2 OF THE ASSESSMENT ORDER . THEN THE ASSESSING OFFICER HAS DISCUSSED THE MODUS OPERANDI ADOPTED BY SHRI ANIL LINGADE IN PARA NO. 2.3 OF THE ASSESSMENT ORDER BUT AS THE NAME OF THE ASSESSEE IS NOT THERE IN NINE LISTED PARTIES, HENCE, W E DO NOT CONSIDER IT NECESSARY TO GO IN THE DETAILS OF THE SAME. THE ASSESSING OFFICER HAS ALSO REFERRED TO ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES AGAINST ONE SHRI FARUK SHAIKH, WHO WAS ALSO A BROKER FROM WHOM THE NAME OF THE ANOTHER BROKER SHRI PAWAN GARG OF JALNA WAS REVEALED. 4 . 2 IN SUM AND SUBSTANCE ALL THE ABOVE REFERRED INFORMATION WAS ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES AND THEY REMOVED THE TMT BARS WITHOUT PAYMENT OF T HE LEGITIMATE EXCISE DUTY. THE ASSESSING OFFICER HAS ALSO DISCUSSED THE MODUS OPERANDI ADOPTED BY SHRI FARUK SHAIKH IN PARA NO. 2.5 OF THE ASSESSMENT ORDER BUT THAT IS ALSO BASED ON THE INVESTIGATION CARRIED OUT BY THE DGCEI. THE ASSESSING OFFICER ALSO R EFERRED TO THE INVESTIGATION MADE BY DGCEI AND OBSERVED THAT THE MANUFACTURERS OF THE TMT BARS WERE CONFRONTED AND THE MANUFACTURERS ADMITTED THAT THEY HAD SUPPLIED TMT BARS TO THE BROKERS WITHOUT PAYING EXCISE DUTY AND THEY CONFIRMED 4 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA THE MODUS OPERANDI AS NARRATED BY SHRI FARUK SHAIKH AND SHRI PAWAN GAR G . THE ASSESSING OFFICER HAS NOTED THAT CONSEQUENT TO ADMISSION BY THE SUPPLIERS OF UNACCOUNTED TMT BARS, THEY ALSO ADMITTED THAT THEY HAD MANUFACTURED THESE TMT BARS FROM RAW MATERIAL VIZ., INGOTS AND BILL ETS FROM UNACCOUNTED RECEIPT OF RAW MATERIAL. AS OBSERVED BY THE ASSESSING OFFICER THE SUPPLIERS IDENTIFIED THE INGOTS/BILLETS FROM ALLEGED UNACCOUNTED RECEIPTS OF RAW MATERIAL. THE ASSESSING OFFICER HAS GIVEN THE NAMES OF THE PARTIES IN PARA NO. 2.7 OF THE ASSESSMENT ORDER AGAINST WHOM THE INVESTIGATION WAS CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES AND THE NAME OF THE ASSESSEE APPEARS AT SL. NO. 10 WH O HAD ALLEGEDLY SUPPLIED INGOTS/BILLETS TO ITS SISTER CONCERN SHRI OM ROLLING MILLS PVT. LTD. TO THE EXTENT OF 288.500 MT. 4.3 ON THE BASIS OF THE INVESTIGATION MADE BY THE DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE (IN SHORT THE DGCEI) BY INITIATING SEARCHES AGAINST SOME BROKERS AND SUB - BROKERS THE CENTRAL EXCISE DEPARTMENT ISSUED SHOW CAUSE NOTICES TO THE ASSESSEE AND OTHER MANUFACTURES WH OSE NAMES WERE REVEALED DURING INVESTIGATION FOR EVASION OF EXCISE DUTY. THE ASSESSEE ADMITTED TO CLANDESTINE REMOVAL OF FINISHED PRODUCTS TO EXTENT OF 288.50 MT WITHOUT PAYMENT OF EXCISE DUTY. THE ASSESS ING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD MADE A PETITION BEFORE THE CENTRAL EXCISE AND CUSTOMS SETTLEMENT COMMISSION ( HEREIN AFTER REFERRED TO AS THE SETTLEMENT COMMISSION) FOR WAIVER OF PENALTY, INTEREST AND IMMUNITY FROM THE PROSECUTION. THE SAID PETITION WAS ADMITTED AND DISPOSED OFF BY THE SETTLEMENT COMMISSION. AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE ALSO ADMITTED THAT THE RAW MATERIAL USED IN PRODUCTION OF THEIR FINISHED PRODUCTS WAS OBTAINED IN CASH FOR WHICH NO RECORDS WERE MAINTAINE D. SIMILARLY, RECEIPTS ON SALE OF FINISHED PRODUCTS I.E . 288.50 MT OF BILLETS/I NGO TS, TOO WERE ALSO IN CASH AND NOT ACCOUNTED FOR. 5 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 5 . THE ASSESSING OFFICER ALSO REFERRED TO THE PROCEEDINGS BEFO RE THE SETTLEMENT COMMISSION AND HAS OBSERVED THAT IN THE S TATEMENT RECORDED BY THE DGCEI ON 12 - 01 - 2007, SHRI SURENDRA S. PEETY, MANAGING DIRECTOR IN SRJ (I.E. ASSESSEE) STATED THAT SRJ IS ENGAGED IN MANUFACTURE OF INGOTS AND BILLETS FROM SPONGE IRON AND MS SCRAP. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAD SUPPLIED INGOTS TO SHRI OM ROLLING MILL PVT. LTD. DURING JULY, 2005 TO AUGUST, 2006 AND THE SAID MATERIAL WAS USED BY SHRI OM ROLLING MILL PVT. LTD. FOR MANUFACTURING OF THE TMT BARS WHICH WERE ALLEGEDLY REMOVED WITHOUT PAYMENT OF THE EXCISE DUTY. TH E ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFORE THE CUSTOM AND CENTRAL EXCISE SETTLEMENT COMMISSION AGAINST THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI DATED 04 - 05 - 2007 ON THE CHARGE THAT THE ASSESSEE HAS REMOVED GOODS CLANDEST INELY WITHOUT PAYMENT OF THE EXCISE DUTY. AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE WAS LEVIED PENALTY OF RS. 8,000/ - BY THE SETTLEMENT COMMISSION AND PETITION WAS DISPOSED OFF BY COMMON ORDER ACCEPTING THE DECLARATION MADE BY THE ASSESSEE . THE ASSES SING OFFICER ALSO REFERRED TO THE STATEMENT MADE BY THE ASSESSEE BEFORE THE DGCEI , MUMBAI AS WELL AS CCESC, AURANGABAD. 6 . IN THE PARA NO. 4 OF THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS DISCUSSED THE PROCESS OF MANUFACTURING OF THE TMT BARS AS WE LL INGOTS AND BILLETS. FINALLY THE ASSESSING OFFICER PROCEEDED TO EXAMINE THE ELECTRICITY CONSUMPTION DECLARED BY THE ASSESSEE IN THE MANUFACTURING OF INGOTS AND BILLETS AND WE WOULD LIKE TO REPRODUCE OF THE SAME IN THE WORDS OF THE ASSESSING OFFICER: 4. 2 ELECTRICITY IS A MAJOR COST INPUT IN PROCESS OF MANUFACTURE OF INGOTS/BILLETS AND ACCOUNTS FOR MAJOR SHARE OF EXPENSES. MANUFACTURERS ARE SANCTIONED LOAD CAPACITY ON THE BASIS OF UNIT CAPACITY. UNIT CAPACITY INCLUDES USAGE FOR FURNACE LOAD AND AUXILIARY LOAD. MAJOR LOAD FACTOR IS ON ACCOUNT OF FURNACE. THE CENTRAL EXCISE DEPARTMENT, AURANGABAD HAS MADE A DETAILED STUDY 6 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA ON ELECTRICITY UNITS CONSUMED PER METRIC TONNE OF PRODUCTION AND MADE IT THE BASIS OF THEIR CONCLUSION THAT THE ASSESSEE HAS INDULGED IN S UPPRESSION OF PRODUCTION. ALL MINI STEEL PLANTS HAVE EXPRESS FEEDERS OF 33KVA LINE WHICH PROVIDES UNINTERRUPTED NON - FLUCTUATING POWER TO THE PLANTS. FURTHER CONSISTENCY IN POWER SUPPLY IS MAINTAINED BY USE OF POWER CONTROL PANE LS. CONSUMPTION PER METRIC TO NE OF PRODUCTION IN A SMALL FURNACE WILL BE MARGINALLY MORE THAN CONSUMPTION IN A LARGE FURNACE. A 6 MT FURNACE WILL CONSUME SLIGHTLY MORE POWER THAN A 25 MT FURNACE PER MT OF PRODUCTION. HOWEVER THIS MORE THAN OFFSET BY RADIATION LOSSES WHICH IS LESS IN A SMALL FURNACE THAN A BIGGER FURNACE. THIS IS BECAUSE OF THE BIGGER SIZE OF MOUTH OF THE CRUCIBLE. A CONTINUOUS CASTING PROCESS USES MORE ELECTRICITY. THEREFORE BILLET MANUFACTURERS WILL CONSUME MORE POWER. HOWEVER, THE MAIN CONSUMPTION IS IN FURNACE AND U NLESS SEPARATE METER IS PROVIDED FOR CONCAST MACHINE, THE ACTUAL CONSUMPTION CANNOT BE WORKED OUT. AN ARTICLE WRITTEN BY SHRI. R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACES ASSOCIATION, NEW DELHI ON 'ELECTRIC STEEL MAKING TECHNOLOGY IN TH E 21ST CENTURY' (AVAILABLE ON THE INTERNET) WHILE DEALING WITH ELECTRIC INDUCTION FURNACE AND INPUTS USED IN THE INDUCTION FURNACE CLEARLY INDICATED THE REQUIREMENT OF POWER CONSUMPTION IN INDUCTION FURNACE IN THE RANGE OF 650 TO 820 UNITS DEPENDING UPON T HE INPUT CHARGE USED. THIS ARTICLE CORROBORATES A TECHNICAL REPORT OF THE IFF, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M. S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VARIES FROM 555 TO 754 UNITS AND WHERE 'SPONGE IRON' IS USED AS AN INPUT THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. IN THE SAID REPORT IT IS ALSO MENTIONED THAT WHILE CALCULATING THE ABOVE RANGE OF ELECTRICAL ENERGY REQUIREMENT FOR MELTING OF SCRAP AND MELTING OF SPONGE IRON, FACTORS LIKE THERM AL EFFICIENCY, ELECTRICAL EFFICIENCY AND NATURE OF MIX OF RAW MATERIALS ETC., WERE CONSIDERED. HOWEVER IN ANY EXTREME CONDITION THE ELECTRICITY REQUIREMENT DOES NOT GO BEYOND 754 UNITS IN RESPECT OF MELTING SCRAP AND 1046 UNITS IN RESPECT OF SPONGE IRON, F ARTHER, M/S. ELECTROTHERM (INDIA) LTD., AHMEDABAD (GUJARAT), MANUFACTURER OF MOST FURNACES IN JALNA, VIDE THEIR LETTER DATED 22 - 06 - 2006 RECOVERED FROM THE FACTORY OF ANOTHER MANUFACTURER VIZ. M/S. TRIMURTHI ISPAT LTD., MIDC KALMESHWAR (DISTT. NAGPUR ). BY T HE PREVENTIVE OFFICERS OF NAGPUR COMMISSIONERATE OF CENTRAL EXCISE HAD CLARIFIED THAT THE RANGE OF ELECTRICITY CONSUMPTION AS 600 TO 625 UNITS PER MT WITHOUT USE OF 7 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA SPONGE IRON AND 660 TO 690 UNITS WITH 50% SPONGE IRON, FOR FURNACE OF 7 M.T. CAPACITIES MAN UFACTURED BY THEM. THESE ASPECTS ARE DEALT WITH IN DETAIL IN THE SCN ISSUED BY THE CENTRAL EXCISE DEPARTMENT TO THE ASSESSEE. THIS ASPECT IS IMPORTANT BECAUSE ALL MANUFACTURERS IN JALNA SHOW WIDE FLUCTUATION IN CONSUMPTION OF ELECTRICITY FOR EVERY METRIC T ONNE OF MILD STEEL PRODUCED. 4.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS,, THE ASSESSEE WAS SPECIFICALLY ASKED AS TO WHY THE CONSUMPTION OF ELECTRICITY FOR PER METRIC TON SHOULD NOT BE ADOPTED FOR THE PURPOSE OF CALCULATION OF SUPPRESSED PRODUCTION AS PER THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD'S SCN FOR THE REASON THAT, IT IS BASED ON THE TECHNICAL ANALYSIS WITH EXPERT OPINION, DETAILED REASONING AND DATA COLLECTED. IN RESPONSE TO THE SAME BY AND LARGE THE ASSESSEE HAS REITERATED TH E STAND TAKEN BEFORE THE COMMISSIONER OF CENTRAL EXCISE, AURANGABAD WHICH IS NOT ON THE SOUND FOOTINGS AND THE SAME HAD BEEN REJECTED WITH ELABORATE REASONING AND LUCID JUSTIFICATION. IN VIEW OF THE ABOVE AS ALSO THE DETAILED COMPARATIVE ANALYSIS OF DATA P REPARED FROM THE ASSESSEE'S BOOKS OF ACCOUNTS, PEER ANALYSIS AND DETAILS FURNISHED, IT IS APPARENT THAT, THE RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE HONOURABLE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD ARE VERY MUCH REASONAB LE FAIR AND JUSTIFIED, I CONCLUDE THAT THE RATES FOR CALCULATION OF SUPPRESSED PRODUCTION IN ASSESSEE'S CASE ADOPTED BY CENTRAL EXCISE & CUSTOMS, AURANGABAD ARE ABSOLUTELY REASONABLE. THE SAME IS ADOPTED ACCORDINGLY FOR THE PURPOSE OF CALCULATION OF UNACCO UNTED PRODUCTION OF FINISHED GOODS. 7 . IN THE OPINION OF THE ASSESSING OFFICER AS THE ASSESSEE HAS NOT DISCLOSED THE TRUE PRODUCTION AS COMPARED TO CONSUMPTION OF THE ELECTRICITY IN THE PRODUCTION OF THE INGOTS AND BILLETS , THE BOOKS OF ACCOUNT OF THE A SSESSEE DID NOT REFLECT THE TRUE AND CORRECT PICTURE OF MANUFACTURING RESULT S OF THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, REJECTED THE BOOKS OF ACCOUNT U/S. 145(1) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER PROCEEDED TO WORK OUT THE ALLEGED SUPP RESSED PRODUCTION BY THE ASSESSEE WHICH ACCORDING TO THE ASSESSING OFFICER IS 20,751 MT AND BY ADOPTING THE AVERAGE SALE PRICE OF RS.18,892/ - PER 8 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA MT, THE ASSESSING OFFICER WORKED OUT THE ALLEGED SUPPRESSION OF THE PRODUCTION TO THE EXTENT OF RS.39,20,36,54 6/ - . AS IN THE REGULAR ASSESSMENT COMPLETED U/S. 143(3) , THE VALUE OF PROFITS ON ALLEGED SUPPRESSED PRODUCTION WAS ADOPTED AT RS.8,44,01,504/ - , T HE ASSESSING OFFICER, THEREFORE, GAVE THE SET OFF OF THE SAID AMOUNT AND MADE THE NET FINAL ADDITION FOR ALLE GED SUPPRESSION OF THE PRODUCTION / SALES OF THE INGOTS AND BILLETS TO THE EXTENT OF RS.30,76,35,042/ - . 8 . SAME WAY IN THE A.Y. 2008 - 09, THE ASSESSING OFFICER TAKING THE ALLEGED SUPPRESSED PRODUCTION /SALES OF THE INGOT AND BILLETS TO THE EXTENT OF 19,276 MT AND BY ADOPTING THE AVERAGE RATE OF RS.21,144/ - PER MT, WORKED OUT THE ALLEGED SUPPRESSION OF THE PRODUCTION /SALES TO THE EXTENT OF RS.40,75,72,486/ - AND MADE ADDITION OF THE ENTIRE VALUE TREATING THE SAME AS INCOME OF THE ASSESSEE. IN BOTH THE ASSESSME NT YEARS THE REASONS GIVEN BY THE ASSESSING OFFICER ARE ANALOGOUS. IT IS ALSO TO BE PUT ON RECORD THAT NO SEPARATE OR INDEPENDENT INVESTIGATION WAS CARRIED OUT BY THE A.O. OR ANY OTHER TAX AUTHORIT IES FOR FRAMING THE ASSESSMENT S FOR A.YS. 2007 - 08 AND 2008 - 09 BUT BOTH THE ASSESSMENTS ARE BASED ON THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIES AND AS PER THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD . THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AS LD. C IT(A) PUT HIS STAMP OF APPROVAL ON THE ADDITIONS MADE BY THE ASSESSING OFFICER WHICH WERE BASED ON THE STATISTIC OF ELECTRICITY CONSUMPTION . THE OPERATIVE PART OF THE FINDING OF THE LD. CIT(A) FOR CONFIRMING THE ADDITIONS IN BOTH THE ASSESSMENT YEARS ARE AS UNDER: 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS RAISED BY THE APPELLANT IN PARA - 7.1 ABOVE AND RAISED BY THE A.O. MENTIONED IN PARA - 5 ABOVE. ON PERUSAL OF THE SAME, IT HAS BEEN OBSERVED AS UNDER (1) THE APPELL ANT HAS CLANDESTINELY REMOVED MS INGOTS/BILLETS AND HAS EVADED EXCISE DUTY AND HAS NOT ACCOUNTED FOR THE SAID SALE OF 9 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA MS INGOTS/BILLETS AS IS EVIDENT FROM THE INVESTIGATION AND ENQUIRIES MADE BY DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE (DGCEI). (2) THE APPELLANT HAS ALSO ADMITTED THE SAID CLANDESTINE REMOVAL OF GOODS IN THE STATEMENT RECORDED IN INVESTIGATION BY DGCEI AND ALSO BEFORE THE SETTLEMENT COMMISSION OF CUSTOMS AND EXCISE DEPARTMENT AND HAS PAID EXCISE DUTY AND THE SETTLEMENT COMMISSION HAS LEVIED TOKEN PENALTY IN RESPECT OF THE SAID CLANDESTINE SALE OUT OF THE BOOKS. (3) THE COMMISSIONER OF EXCISE IN HIS ORDER AND THE A.O. HAVE REASONABLY ESTIMATED, AFTER CONSIDERING VARIOUS REPORTS AND STUDIES IN RESPECT OF ELECTRICITY CONSUMPTION REQUIRE D FOR PRODUCING MS INGOTS/BILLETS, AT 1026 ELECTRICITY UNITS PER METRIC TON. (4) THE A.O. HAS ALSO POINTED OUT THAT THERE IS SUBSTANTIAL VARIATION IN VARIOUS MONTHS AND IN RESPECT OF VARIOUS MANUFACTURERS OF MS INGOTS/BILLETS IN ELECTRICITY CONSUMPTION RE QUIRED FOR THE QUANTUM OF GOODS PRODUCED, WHICH IS ABNORMAL. THE A.O. HAS ALSO NOTED SUBSTANTIAL VARIATION IN YIELD AND SHORTAGES DURING VARIOUS MONTHS IN THE YEARS UNDER APPEAL. (5) THE DECISION IN THE CASE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE) HAS BEEN RELIED ON BY THE APPELLANT. THE FACTS BEFORE THE HON'BLE ITAT WHILE DECIDING THE SAID CASES WERE 'AFFERENT TO SOME EXTENT. IN THE SAID CASES, CLANDESTINE REMOVAL OF GOODS BY THE APPELLANT AND THE ADMISSION OF THE APPELLANT ABOUT THE SAID FACT OF UNACCOUNTED TRANSACTIONS WAS NOT BEFORE THE HON'BLE ITAT. FURTHER, THE DETAILED ORDER OF THE COMMISSIONER OF EXCISE AND THE OTHER FACTS BROUGHT ON RECORD BY THE A.O. IN THE ASSESSMENT ORDER WAS NOT BEFORE T HE HON'BLE ITAT, PUNE WHILE DECIDING THE ABOVE REFERRED CASES. FURTHER IN THE SAID CASES ACTION U/S 132 WAS CONDUCTED AND THE APPELLANT WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT OF COMPLETED ASSESSMENTS IN SUCH CASES COULD BE MADE ONLY ON THE BASIS OF MATERIAL FOUND IN SEARCH ACTION. IN VIEW OF THE ABOVE FACTS, THE RELIANCE PLACED BY THE APPELLANT ON THE ABOVE REFERRED DECISION IS MISPLACED. FURTHER, THE OTHER DECISIONS RELIED ON BY THE APPELLANT IN SUPPORT OF ITS ABOVE CONTENTION ARE A LSO DISTINGUISHABLE ON FACTS AS IN THE SAID CASES THE CLANDESTINE REMOVAL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT. 10 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BASIS OF ELECTRICITY UNITS CONSUMED WERE NOT PRESENT I N THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW OF THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PURCHASES AND SALES ADMITTED BY THE APPELLANT AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. (7) THE APPELLANT HAS NOT MAINTAINED INFORMATION IN FORM NO.G - 7, WHICH IS COMPULSORY, SHOWING DAILY CONSUMPTION OF POWER IN UNITS. (8) THE FACTS OF THE DECISIONS RELIED ON BY THE APPELLANT ARE DIFFERENT AND RATIO LAID DOWN BY THE SAID DECISIONS IN THE CASE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE) IN RESPECT OF GROSS PROFIT ADDITION CAN ONLY BE APPLIED WITH SOME ALTERATION CON SIDERING THE FACT OF THE CASE OF THE APPELLANT. (9) THE VARIOUS MANUFACTURERS OF MS INGOTS/BILLETS HAVE FILED PETITION FOR STAY OF RECOVERY OF EXCISE ON ALLEGED UNDISCLOSED PRODUCTION SOLD BEFORE HON'BLE CESTAT. THE HON'BLE APPELLATE TRIBUNAL, WEST ZONAL BENCH HAS PASSED ORDER DATED 01/03/2011 ON THE SAID STAY PETITION. IN THIS ORDER, THE HON'BLE APPELLATE TRIBUNAL HAS OBSERVED THAT THE FACTS OF THE CASE INCLUDING R.A. CASTINGS RELIED ON BY THE APPLICANTS CANNOT BE FOLLOWED AS PRECEDENT AS IN THE SAID CASE NO TTROBORATIVE EVIDENCE WAS FOUND BY THE BENCH. THE HON'BLE APPELLATE TRIBUNAL HAS FURTHER OBSERVED THAT THE CRUCIAL EVIDENTIARY FINDINGS HAVE BEEN NOTED IN THE CASES OF THE APPLICANTS INCLUDING THE APPELLANT. THE SAID FINDINGS IN THE CASE OF - THE APPEL LANT ARE AS UNDER '(A) COST OF ELECTRICITY AND RAW MATERIAL SHOWN TO BE 125% OF SELLING PRICE OF INGOTS. (B) SANCTIONED AUXILIARY LOAD WAS ONLY 7. 8% OF THE TOTAL SANCTIONED LOAD BUT CLAIMED TO BE 25% BY APPELLANT IN STATEMENT; (C) COMMISSIONER OF INCOME TAX (APPEALS)' CONFIRMED NET ADDITION OF INCOME OF RS.23.5 LAKHS ON ACCOUNT OF SUPPRESSED PRODUCTION OF INGOTS FOR ASSESSMENT YEARS 2001 - 02 TO 2006 - 07. (D) CLANDESTINE CLEARANCE FOR SPECIFIC CASE ADMITTED BEFORE SETTLEMENT COMMISSION. 11 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA SIMILAR OBSERVA TIONS HAVE BEEN MADE BY THE HON'BLE APPELLATE TRIBUNAL IN THE CASE OF OTHER MANUFACTURERS. THE HON'BLE CESTAT HAS ALSO TAKEN SUPPORT OF DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGAPPA CEMENT PVT. LTD. VS. CEGAT & CCE, TRICHY (2010 - TIOL - 770 - H C - MAD - CX) AND HELD THAT THE REVENUE CANNOT BE FAULTED FOR DEMANDING DUTY ON THE STEEL INGOTS WHICH COULD HAVE BEEN MANUFACTURED BY CONSUMING EXCESS QUANTITY OF ELECTRICITY. THE HON'BLE APPELLATE TRIBUNAL HAS HELD IN CONCLUDING PARA - 22 THAT 'NONE OF THE APP ELLANTS EXCEPT M/S SHREE STEEL CASTINGS HAS MADE OUT THE PRIMA - FACIE CASE ON MERITS. THEY CANNOT RAISE A VALID PLEA OF LIMITATION EITHER. SUPPRESSION OF RELEVANT FACTS IS INBUILT IN CLANDESTINE PRODUCTION OF EXCISABLE GOODS AND ITS REMOVAL WITHOUT PAYMENT OF DUTY, AND THE SAME, PRIMA - FACIE, STANDS ESTABLISHED IN THESE CASES.' 7.3 IN VIEW OF THE FACTS OF THE CASE AND ABOVE MENTIONED REASONS MENTIONED BY THE A.O. AND RESPECTFULLY CONSIDERING OBSERVATIONS IN THE DECISION OF CUSTOMS, EXCISE & SERVICE TAX APPEL LATE TRIBUNAL, WEST ZONAL BENCH ORDER 01/03/2011 IN THE CASE OF THE APPELLANT AND O THERS, I HOLD THAT THERE IS SUPPRESSION OF SALE AND PROFIT IN THE YEARS UNDER APPEAL AND HENCE THE PROFIT DECLARED BY THE APPELLANT CANNOT BE ACCEPTED WITHOUT MAKING FURTHER ADDITION O N A CCOUNT OF PROFIT ON SUPPRESSED SALE. 7.4 IN VIEW OF THE ABOVE FACTS, OBSERVATIONS AND DISCUSSION AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS JUSTIFIED IN ARR IVING AT THE SUPPRESSED PRODUCTION/SALE OF MS INGOTS/BILLETS ON THE BASIS OF ELECTRICITY UNIT CONSUMPTION. THE FIRST ISSUE IS, THEREFORE, DECIDED AGAINST THE APPELLANT. NOW, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDERS OF THE LD. CIT(A) CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR A. YRS. 2007 - 08 & 2008 - 09. 9 . AT THIS STAGE WE ARE NOT CONSIDERING THE APPEALS FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE FINDING OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSE D PRODUCTION/SALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND S O ME 12 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA REASONABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT @ 4% ON THE VALUE OF A LLEGED SUPPRESSED PRODUCTION /SALES AND ACCORDINGLY, PARTLY SUSTAINED THE ADDITION S . NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF R S.39,20,36,546/ - IN THE A.Y. 2007 - 08 AND RS.40,75,72,486/ - IN THE A.Y. 2008 - 09 ON ALLEGED SUPPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT P ICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJECTED. 10 . THE LD. AR FOR THE ASSESSEE OPEN ED HIS ARGUMENT BY SUBMITTING THAT BOTH THE ASSESSMENTS ARE BASED ON THE INVESTIGATION MADE BY THE CENTRAL EXCISE AUTHORITIES AS W ELL AS THE ADJUDICATION ORDER PASSED BY THE CCE , AURANGABAD. HE SUBMITS THAT THERE WAS A SEARCH AND SEIZER ACTION AGAINST THE ASSESSEE U/S. 132 (1) OF THE ACT ON 17 - 03 - 2006 AND ON THE BASIS OF SEARCH AND SEIZURE ACTION ASSESSMENT U/S. 153A FOR THE A.Y RS . 2 00 0 - 2001 TO 2006 - 07 WERE FRAMED. HE SUBMITS THAT IN THE INTENSIVE SEARCH AND SEIZURE OPERATION , IT WAS VERY EASY FOR THE DI (INV.) OF THE REVENUE TO VERIFY THE TRUTHFULNESS OF THE CHARGE NOW MADE AGAINST THE ASSESSEE. HE SUBMITS THAT SO FAR AS THE ASSESS MENT S FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE FOR THE A.Y RS . 200 0 - 20 01 TO 2006 - 07 ARE CONCERNED , WHEN THE MATTER REACHED BEFORE THE TRIBUNAL IT IS HELD THAT ON THE MERE BASIS OF THE CONSUMPTION OF THE ELECTRICITY NO ADDI TION CAN BE MADE. HE SUBMITS THAT THE REVENUE HAS TAKEN THE ISSUE OF THE FORM NO. G - 7 BUT THE ASSESSEE IS UNDER NO LEGAL OBLIGATION TO MAINTAIN THE SAME. LD. A.R. REFERRED TO PAGE NO. 6 OF THE P/B AND SUBMITS THAT THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS A SUBJECT MATTER OF 13 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA APPEAL BEFORE THE CUSTOM , EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, MUMBAI (IN SHORT CESTAT) AND THERE WAS A DIFFERENCE OF OPINION BETWEEN HONBLE MEMBER S OF THE DIVISIONAL BENCH AND THE MATTER WAS REFERRED TO LD. THIRD MEMBER AND LD. THIRD MEMBER OF THE CESTAT VIDE ORDER DATED 31 - 07 - 2014 CONCURRED WITH THE ORDER PASSED BY HONBLE VICE - PRESIDENT OF CESTAT BY HOLDING THAT MERELY ON THE BASIS OF THE ELECTRICITY CONSUMPTION WHICH IS ALSO NOT BY ANY INVESTIGATION BUT ON THE TECHNICAL OPINION OF DR. BATRA OF THE IIT, KANPUR , NO CHARGE CAN BE MADE THAT THE ASSESSEE HAS EVADED THE EXCISE DUTY BY SUPPRESSING THE PRODUCTION. HE REFERRED TO ASSESSMENT ORDER AND SUBMITS THAT THE ENTIRE ASSESSMENT ORDER FOR THE A.YS. 2007 - 08 AND 2008 - 09 ARE BASED ON THE ORDER PASSED BY THE CCE , AURANGABAD AND THAT ORDER HAS MERGED WITH THE ORDER OF THE CESTAT, MUMBAI AND IT IS NOT IN FORCE NOW. HE ARGUES THAT WHAT IS TO BE CONSIDERED NOW IS THE MAJORITY ORDER OF THE CESTAT AND NOT THE ORDER PASSED BY THE CCE , AURANGABAD. LD. A . R . REFERRED TO THE ORDER PASSED BY THE LD. THIRD MEMBER OF THE CESTAT AND SUBMITS THAT THE SAID ORDER IS SELF - EXPLANATORY AS EVEN SO CALLED INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITY WAS MEREL Y BASED ON THE TECHNICAL OPINION OF DR. BATRA, PROFESSOR OF IIT, KANPUR AND NOT BY GATHERING ANY EVIDENCE AGAINST THE ASSESSEE. HE SUBMITS THAT THE ORDER PASSED BY THIS HON'BLE TRIBUNAL IN THE APPEAL S FILED BY THE ASSESSEE CHALLENGING THE ASSESSMENT FRAME D IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION UNDER SEC. 132(1) IS REPORTED AS 137 TTJ PUNE 627 AND THE COPY OF THE SAME IS PLACED AT PAGE NO. 1 OF P/B - III. HE SUBMITS THAT THE DECISION OF THE TRIBUNAL HAS REACHED THE FINALITY AS THE HON'BLE JURISDICT IONAL HIGH COURT CONFIRMED THE ORDER OF THIS TRIBUNAL AND DISMISSED THE APPEA S FILED BY THE REVENUE. 10 .1 HE SUBMITS THAT THE ASSESSEES CASE IS IDENTICAL ON FACTS WITH THE CASE OF A.K. A LLOYS 17 ITR 424 (CHND) (TRIB . ) AND ADDITION CANNOT BE MADE MERE BY BASED ON THE TECHNICAL OPINION O N THE ELECTRICITY CONSUMPTION 14 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA FOR PRODUCTION OF INGOTS/ BILLETS PER MT . LD. AR PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS: I) ACIT VS. A.K. ALLOYS PVT. LTD. 17 ITR 424 (CHND)(TRIB.) II) ACIT VS. ARORA ALLOYS LTD. 27 T AXMAN N .COM 1 4 0 III) VISHA L PAPER INDUSTRIES VS. JCIT 32 T AXMAN N .C O M 247 IV) ACIT VS. KHAMBHAT T A FAMILY TRUST 62 TTJ 685 10 .2 REFERRING TO THE PETITION FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION (THE CUSTOM AND CENTRAL E XCISE), HE SUBMITS THAT SOME THIRD PART Y INVESTIGATION WAS CARRIED OUT BY THE CENTRAL EXCISE DEPARTMENT AND AS PER THE ALLEGED ADMISSIONS AND STATEMENTS OF THE BROKERS /SUB - BROKERS THAT THE ASSESSEE COMPANY HAS SOLD 288.500 MTS OF INGOTS/BILLETS TO ITS SISTER CONCERN I.E. OM ROLLING MILLS PVT. LTD. THE ASSESSEE DECIDED TO APPROACH THE SETTLEMENT COMMISSION AS A BUSINESSMAN TO AVOID HARASSMENT BY EXCISE AUTHORITIES AND ADMITTED THAT TO EXTENT OF 288.500 MTS THE ASSESSEE HAS NOT PAID EXCISE DUTY AND GOODS WERE REMOVED. HE REFERRED TO PAGE NO. 21 2 OF THE P/B - 1, WHERE THE COPY OF THE ORDER PASSED BY THE CUSTOM AND EXCISE SETTLEMENT COMMISSION ( ADDITIONAL BENCH ) , MUMBAI DATED 12 - 12 - 2007 IS PLACED AND SUBMITS THAT NOWHERE IT WAS THE CASE OF THE CENTRAL EXCISE AUTHORIT IES THAT THE CLANDESTINE REMOVAL OF THE GOODS WAS HAVING ANY NEXUS WITH THE CONSUMPTION OF THE ELECTRICITY. HE SUBMITS THAT SO FAR AS THE ASSESSEE IS CONCERNED THE ASSESSEE CAME FORWARD ALONG WITH OTHER MANUFACTURER AND OPTED TO PAY THE EXCISE DUTY ON RECEIVING SHOW CAUSE NOTICE (SCN) TO BUY PEACE AND ALSO TO AVOID THE LITIGATION. HE SUBMITS THAT WHATEVER WAS OFFERED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION , THE INCOME ON SAID ADMITTED PRODUCTION HAS BEEN OFFERED IN THE INCOME TAX PROCEEDING ALSO. THE CENTRAL EXCISE AUTHORIT IES HAVE NOT OBJECTED OR OPPOSED TO THE PRODUCTION ADMITTED AND OFFERED FOR PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION BY THE ASSESSEE AND IT SHOWS THAT NOTHING WAS THERE IN THE POSSESSION OF THE CENTRAL EXCISE 15 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA AUTHORITY TO OPPOSE THE PETITION FIL ED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. 10.3 IN RESPECT OF THE REJECTION OF THE BOOKS OF ACCOUNT , HE SUBMITS THAT THE ENTIRE CASE OF ASSESSING OFFICER IS BASED ON TECHNICAL OPINION REPORT OF THE DR. N.K. BATRA OF THE IIT, KANPUR. HE SUBMIT S THAT THE VERY BASIS OF THE CHARGE OF ALLEGED SUPPRESSION OF PRODUCTION/SALES DID NOT EXIST AS THERE ARE VARIOUS OTHER TECHNICAL OPINION ON CONSUMPTION OF ELECTRICITY FOR PRODUCTION OF ONE MT OF BILLETS/IGNOTS WHICH HAS BEEN REFERRED IN THE ORDER OF THE C ESTAT. THERE IS NO BASE TO SAY THAT FOR PRODUCTION OF ONE MT TON OF BILLETS/ IGNOTS REQUIRED ELECTRICITY CONSUMPTION IS 1026 UNITS. 10 . 4 HE SUBMITS THAT AS THE CESTAT , MUMBAI BENCH HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSE QUASHING THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AND THERE IS NO QUESTION OF REJECTION OF THE BO OKS OF ACCOUNT AS VERY BASIS FOR MAKING HUGE ADDITIONS DOES NOT SURVIVE NOW. HE SUBMITS THAT WHEN THERE IS NO INCRIMINATING MATERIAL AGAINST THE ASSESSEE EVEN DURING THE C OURSE OF INTENSIVE SEARCH CARRIED OUT BY THE DI (INV.) OF THE REVENUE THEN HOW SUBSEQUENTLY MERELY ON THE BASIS OF SOME TECHNICAL OPINION REPORT BY ONE DR. N.K. BATRA , BOOKS OF ACCOUNTS CAN BE REJECTED. HE PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS: I. RAJ KUMAR CHAWLA VS. ITO 94 ITD 1 II. KUBER TOBACCO PRODUCTS PVT. LTD. VS. DCIT 117 ITD 273 III. ASHOK B. BAFNA VS. DCIT 27 TAXMANN.COM 126 IV. ITO VS. ALIGARH AUTO CENTRE 58 SOT 90 V. SANJEEV R. ARORA VS. ACIT 29 TAXMANN.COM 287 VI. M/S. BEDROCK LTD. VS. DCIT DATED 25 - 07 - 201 2 VII. AMITI SOFTWARE TECHNOLOGIES PVT. LTD. VS. ITO DATED 07 - 02 - 2014 VIII. ADIT (E) VS. VODITHALA EDUCATION SOCIETY 39 TAXMANN.COM 100 16 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 10 . 5 HE PLEADED FOR ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE AND DELETING THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER AND ON PRINCIPLES CONFIRMED BY THE LD. CIT(A). 1 1 . THE LD. SPL. AR FOR THE REVENUE OPEN ED HIS ARGUMENT BY SUBMITTING THAT THERE IS AN EVIDENCE IN POSSESSION OF THE ASSESSING OFFICER IN RESPECT OF THE SUPPRESSION OF THE PRODUCTION AND CLANDESTINE REMOVAL OF GO ODS BY THE ASSESSEE AND THERE IS NO MERITS IN THE CONTENTION OF THE ASSESSEE COMPANY THAT THE ASSESSING OFFICER HAS SIMPLY RELIED UPON THE HYPOTHETICAL CALCULATIONS OF PRODUCTION MERELY ON THE BASI S OF CONSUMPTION OF ELECTRICITY. HE REFERRED TO THE ASSESS MENT ORDER AND SUBMITS THAT IN PARA NO. 3.1 THE ASSESSING OFFICER HAS OBSERVED THAT THE CONFESSIONAL STATEMENT OF SHRI SURENDRA S. PETTY, DATED 12 - 01 - 2007 WHO IS THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY , BEFORE THE DGCEI ON CLANDESTINE REMOVAL GOODS A ND SALE OF 2 8 5 MT OF INGOTS TO SHREE OM ROLLING MILLS WITHOUT PAYMENT OF EXCISE DUTY AND HE ALSO ADMITTED THAT THE SAID SALES WERE MADE AGAINST CASH. DURING THE ASSESSMENT PROCEEDINGS, IN THEIR JOINT WRITTEN SUBMISSIONS DATED 13 - 12 - 2010 FILED BEFORE THE A SSESSING OFFICER BY THE ASSESSEE COMPANY AND SHREE OM ROLLING MILLS PVT . LTD . THE ASSESSEE COMPANY OFFERED INCOME OF RS.6,72,620 / - I.E. G.P. @ 3% ON SUPPRESSED SALES OF RS.47,75,600 / - + RS.5,29,350 / - TOWARDS PEAK PURCHASES . HE SUBMITS THAT SHREE OM ROLLIN G MILLS PVT. LTD. WHICH IS A SISTER CONCERN OF THE ASSESSEE COMPANY, OFFERED PROFIT OF RS.1,08,920 / - O N THE IMPUGNED SUPPRESSED SALES. HE ARGUES THAT THE ASSESSEE ITSELF HAS ADMITTED THE FACT OF CLANDESTINE REMOVAL OF GOODS AND SALE OF THE SAME BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS MADE THE REFERENCE OF THE SAID ADDITION IN THE ASSESSMENT ORDER MORE PARTICULARLY IN PARA NO. 1.4 BY OBSERVING THAT THE ASSESSEE COMPANY HAS OFFERED PROFIT OF RS.6,72,620 / - O N ACC OUNT OF ADMISSION OF SUPPRESSED PRODUCTION. THE ASSESSEE WAS ALSO INDULGED INTO PURCHASES OF THE RAW MATERIAL IN CASH. 17 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA HE SUBMITS THAT WHEN THE ASSESSEE COMPANY HAS GIVEN A CONFESSION IN UNEQUIVOCAL MANNER IN RESPECT OF THE SUPPRESSION OF SALES NOT ONLY BEFORE THE CENTRAL EXCISE A UTHORITIES BUT ALSO BEFORE THE ASSESSING OFFICER AND THE SAID CONFESSION TILL THIS DAY HAS NOT BEEN RETRACTED , HENCE, THE ASSESSEE CANNOT ARGUE THAT THE ENTIRE ADDITION TOWARDS THE SUPPRESSION OF PRODUCTION AND SALE IS ON BASIS O F ARITHMETICAL CALCULATION OF THE ELECTRICITY CONSUMPTION. HE ARGUES THAT IT IS A WELL SETTLED LAW THAT AN ADMISSION IS A GOOD PIECE OF EVIDENCE AND THE SAME BINDS THE MAKER OF THE ADMISSION UNLESS IT IS SUCCESSFULLY RETRACTED. HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD . VS. STATE OF KERALA AND ANOTHER REPORTED IN 91 I TR 18 (SC). HE ARGUES THAT THE SAID ADMISSION OF THE ASSESSEE ON THE PRINCIPLE OF ESTOPPEL AS PER SECTION 115 OF THE INDIAN EVIDENCE ACT , 1872 IS ALSO BINDING ON THE ASSESSEE COMPANY. 1 1 .1 LD. SPL. AR FOR THE REVENUE SUBMITS THAT THE ASSESSEE COMPANY APPROACHED THE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION, MUMBAI FOR WAIVER OF PENALTY AND IMMUNITY FROM PROSECUTION FOR EVADING TH E EXCISE DUTY ON CLANDESTINE REMOVAL AND SALE OF GOODS. LD. SPL. AR REFERRED TO PAGE NO. 218 OF PAPER BOOK NO. 1 FILED BY THE ASSESSEE COMPANY WHERE THE COPY OF THE ORDER PASSED BY SETTLEMENT COMMISSION IS PLACED AND HE SUBMITS THAT THERE IS A CATEGORICAL OBSERVATION BY THE SETTLEMENT COMMISSION THAT THE ASSESSEE WAS INDULGED ALONG WITH THE OTHER COMPAN IES, INDIVIDUALLY AND COLLECTIVELY FOR EVASION OF DUTIES. HE PLACED HIS HEAVY RELIANCE ON THE SAID OBSERVATION OF THE SETTLEMENT COMMISSION AND SUBMITS THA T THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF THE SETTLEMENT COMMISSION BEFORE ANY SUPERIOR FORUM WHEN THE ADVERSE FINDING HAS BEEN GIVEN AGAINST THE ASSESSEE . HE SUBMITS THAT ASSESSEE HAS REPEATEDLY HARPED THAT SOLELY WITH A VIEW TO BUY PEACE OF MIND AN D AVOID LITIGATION , THEY HAVE APPROACHED THE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION , MUMBAI AND THEREFORE NO ADVERSE 18 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA INFERENCE CAN BE DRAWN AGAINST THEM . IN AN APPLICATION FILED BEFORE THE SETTLEMENT COMMISSION IT IS MENTIONED THAT THE ASSESSEE AD MITS THE DUTY LIABILITY . HE SUBMITS THAT THERE IS NO QUESTION OF SUO MOTO ADMITTING CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY BY THE ASSESSEE COMPANY BEFORE THE EXCISE AUTHORIT IES BUT THERE WAS CONCLUSIVE EVIDENCE AGAINST THEM AS PER THE INVESTIGATION MADE BY THE DGCEI . HE PLACED HIS RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA P . LTD . VS. CIT 358 I TR 593 ( SC ). HE SUBMITS THAT THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION AS WELL AS THE CONFESSION BY THE ASSESSEE ARE THE GOOD PIECE S OF EVIDENCE WHICH ARE ALSO BAS IS FOR ARRIVING AT THE CONCLUSION THAT THE ASSESSEE WAS INDULGED INTO CLANDESTINE REMOVAL OF THE GOODS WITHOUT PAYMENT OF THE EXCISE DUTY AND SUPPRESSION OF THE SALES. HE SUBMITS THAT IT IS WE LL SETTLED LAW THAT IF SUPPRESSION FOR PART OF THE PERIOD IS FOUND THEN SUPPRESSION CAN BE ESTIMATED FOR THE REST OF THE YEAR. PRESUMPTION U/S . 114 OF THE INDIAN EVIDENCE ACT CAN BE RELIED UPON IN ESTIMATING THE SUPPRESSED INCOME. ON THIS PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS : I. COMMISSIONER OF SALES TAX VS. H.M. ESUFALI H.M. ABDULAI 90 I TR 271 . (SC). II. AMBIKA PRASAD THAKUR AND OTHERS VS. MAHARAJ KUMAR KAMAL SINGH AND OTHERS 1 966 AIR 605 (SC) III. CIT VS. DR. M.K.E. MEMON 248 ITR 310 (B OM ) IV. CIT VS. HO TEL MARIYA 332 ITR 537 ( KERALA ) 1 1 .2 LD. SPL. AR FOR THE REVENUE SUBMITS THAT THERE WAS ERRATIC CONSUMPTION OF ELECTRIC POWER AS COMPARED WITH THE PRODUCTION DECLARED BY THE ASSESSEE COMPANY . HE REFERRED TO PAGE NOS.207 TO 211 OF PAPER BOOK NO. 1 FILED BY THE ASSESSEE AND SUBMITS THAT THE ASSESSEE HAS SUBMITTED THE STATEMENTS SHOWING MONTHLY CONSUMPTION OF ELECTRICITY UNITS VIS - A VIS PRODUCTION FOR THE PERIOD F.Y. 2004 - 05 TO F.Y. 2008 - 09. 19 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA THE ASSESSEE HAS NOT EXPLAINED WHY THERE WAS UNUSUAL VARIATION I N CONSUMPTION OF ELECTRICITY, EVEN THOUGH THE ASSESSING OFFICER CALLED FOR EXPLANATION OF THE ASSESSEE COMPANY. HE REFERRED TO THE DECISION OF THE DIVISIONAL BENCH OF THE CESTAT MORE PARTICULARLY THE DISSENTING ORDER OF LD. TECHNICAL MEMBER AND SUBMITS TH AT AS PER THE OBSERVATION OF THE LD. TECHNICAL MEMBER THIS ASSESSEE AND OTHER COMPANIES WERE INVOLVED IN THE FRAUD BY EVADING EXCISE DUTY . HE ARGUES THAT THE ASSESSEE COMPANY HAS NOT DISPUTED THE ADVERSE OBSERVATION OF THE LD. TECHNICAL MEMBER OF THE CEST AT EVEN BEFORE THE HON'BLE BENCH IN THE COURSE OF HEARING OF THE PRESENT APPEALS. HE SUBMITS THAT THE ELECTRICITY CONSTITUTES IS A MAJOR COST OF PRODUCTION I.E . 29.67 % AND THE ASSESSING OFFICER HAS RIGHTLY CALCULATED THE SUPPRESSED PRODUCTION ON THE BASI S OF ELECTRICITY CONSUMPTION . LD. SPL. AR ARGUES THAT THERE IS PRESUMPTION ON THE ISSUE THAT IF CONSUMPTION OF ELECTRICITY INCREA SES, THERE IS ALSO INCREASE IN THE PRODUCTION. HE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MELTON IN DIA VS. THE COMMISSIONER TRADE TAX U.P. 2007 - TIOL - 14 - SC - CT . HE ALSO PLACED HIS RELIANCE OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TRIVENI RUBBER AND PLASTICS VS. COLLECTOR OF CENTRAL EXCISE , COCHIN 2002 - TIOL - 547 - SC - CX IN SUPPORT OF HIS ARGUMENT THAT IF THERE IS AN ADMISSION OF SUPPRESSION OF TURNOVER THEN CONSUMPTION OF ELECTRICITY CAN FORM THE BASIS OF ESTIMATION OF SUPPRESSION. HE SUBMITS THAT I T IS A WELL SETTLED LAW THAT IN CASE OF CONCEALMENT OF INCOME DIRECT EVIDENCE IS SELDOM AVA ILABLE AND THE CASE HAS TO BE DECIDED ON THEORY OF PREPONDERANCE OF PROBABILITY. IN SUPPORT OF THIS ARGUMENT HE RELIED ON THE FOLLOWING PRECEDENTS: I. SUMATI DAYAL VS. CIT 214 ITR 801 (SC) . II. COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL 200 2 - TIOL - 253 - SC - CUS . 20 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 11.3 HE ARGUES THAT O N THE DOCTRINE OF PREPONDERANCE OF PROBABILITY THE ACTION OF THE ASSESSING OFFICER TO ESTIMATE SUPPRESSION OF THE SALES ON THE BASIS OF THE ELECTRICITY CONSUMPTION HAS TO BE UPHELD. 1 1 .4 LD. SPL. AR SUBMITS THAT THE ASSESSEE COMPANY HAS VEHEMENTLY ARGUED THAT IN THE CASE OF R.A. CASTINGS PVT. LTD. 237 E.L.T. 674 (TRI. DEL . ) IT I S HELD THAT THE SUPPRESSED PRODUCTION WORKED OUT SOLELY ON CONSUMPTION OF ELECTRICITY CANNOT BE SUSTAINED. IT WAS FURTHER ARGUED THAT TH E AFORESAID DECISION OF THE CESTAT WAS AFFIRMED BY THE HON'BLE ALLAHABAD HIGH COURT AND SLP FILED BY THE REVENUE TO THE SUP REME COURT WAS DISMISSED. HE ARGUES THAT THE SAID DECISION IS NOT HELPFUL TO THE ASSESSEE FOR THE FOLLOWING REASONS: I. IN THE SAID DE CISION THERE WAS NOT EVEN AN IOTA OF EVIDENCE SHOWING THE SUPPRESSION OF PRODUCTION BY THE SAID COMPANIES AND THE SUPPRESSION WAS ESTIMATED MERELY ON THE BASIS OF ELECTRICITY CONSUMPTION RELYING ON THE REPORT OF LATE D R. N.K. BATRA, PROFESSOR OF IIT , KANPU R W HEREAS IN THE PRESENT CASE THERE IS A STRONG EVIDENCE AGAINST THE ASSESSEE IN THE FORM OF ADMISSION BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY BEFORE CENTRAL EXCISE AUTHORITIES AS WELL AS BEFORE THE ASSESSING OFFICER IN RESPECT OF REMOVAL OF G OODS IN CLANDESTINE MANNER AND EVASION OF THE DUTIES. II. THE ASSESSEE COMPANY HAS OFFERED THE INCOME OF THE SUPPRESSED TURNOVER FOR TAXATION DURING REASSESSMENT PROCEEDINGS SUO MOTO . III. THE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION , MUMBAI HAS TAK EN A CATEGORICAL NOTE OF CLANDESTINE REMOVAL OF GOODS BY THE ASSESSEE COMPANY . IV. T HE ASSESSEE COMPANY HAS NOT GIVEN ANY PLAUSIBLE EXPLANATION A S TO WHY AND FOR WHAT REASONS THE CONSUMPTION OF ELECTRICITY IN SUBSEQUENT YEARS HAS FALLEN DOWN AND HAS ATTAINED THE LEVEL OF CONSUMPTION AS ESTIMATED BY THE LEARNED ASSESSING OFFICER. 21 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 1 1 .5 HE SUBMITS THAT THE BOOKS OF ACCOUNT ARE NOT SHOWING THE CORRECT STATE OF AFFAIRS AND HENCE, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT BY INV OKING THE PROVISIONS OF SECTION 145 (3) OF THE I.T. ACT. HE ARGUES THAT EVEN IF THERE WAS DIFFERENCE OF OPINION BETWEEN THE HONBLE MEMBERS OF CESTAT, MUMBAI IN WHICH THE LD. TECHNICAL MEMBER HAS DISSENTED AND EVEN THOUGH THE SAID DECISION IS A MINORITY D ECISION, BUT IT HAS AN EVIDENTIAL VALUE AND THE SAME CANNOT BE REJECTED. HE PLACED HIS RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT . LTD . 198 ITR 297 (SC) IN SUPPORT OF HIS CONTENTION THAT THE ENTI RE JUDGMENT IS TO BE CONSIDERED AND WE CANNOT CONFINE TO A PARTICULAR OBSERVATION. HE SUBMITS THAT THE SLP FILED BY THE REVENUE BEFORE THE HONBLE SUPREME COU R T IN THE CASE OF R.A. CASTINGS (SUPRA) CHALLENGING THE DECISION OF THE HON'BLE ALLAHABAD HIGH CO URT WAS SUMMARILY DISMISSED BUT SUMMARY DISMISSAL OF THE SLP DOES NOT LAY DOWN ANY LAW NOR IT IS A BINDING PRECEDENT. HE REFERRED TO THE DECISION OF THE LD. THIRD MEMBER OF THE CESTAT, MUMBAI IN THE APPEAL OF THE ASSESSEE COMPANY BEING NO.1319/09/MUM AND SUBMITS THAT THE LD. THIRD MEMBER HAS HELD THAT ESTIMATION OF ALLEGED SUPPRESSED TURNOVER ON THE BASIS OF MERE CONSUMPTION OF ELECTRICITY WAS IMPERMISSIBLE AND THE ORDER OF THE CCE , AURANGABAD WAS CANCELLED. HE SUBMITS THAT THE DECISION OF THE THIRD MEMBE R IS NOT BINDING ON THE HON'BLE BENCH WHILE DECIDING THE PRESENT APPEALS FOR THE REASON THAT THE DECISION OF CESTAT DOES NOT HAVE ANY BINDING FORCE ON ITAT WHICH IS CONSTITUTED UNDER THE INCOME TAX ACT . BOTH THE TRIBUNALS ARE CONSTITUTED UND ER DIFFERENT EN ACTMENTS AND DISCHARGE THEIR FUNCTIONS INDEPENDENTLY UNDER RESPECTIVE ENACTMENT . HOWEVER , THE DECISION OF ONE TRIBUNAL MAY HAVE PERSUASIVE VALUE FOR OTHER TRIBUNAL IN CER TAIN CASES WHERE ISSUES ARE IDENTICAL . 1 1 .6 LD. SPL. AR FOR THE REVENUE VEHEMENTLY AR GUES THAT T HE HON'BLE THIRD MEMBER OF THE CESTAT HAS NOT CONSIDERED THE EVIDENCE ABOUT THE 22 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA CLANDESTINE REMOVAL OF GOODS AND THE DUTY PAID ON THE SAME WHICH MATTER WAS SETTLED BEFORE THE SETTLEMENT COMMISSION. LD. SPL. AR FOR THE REVENUE VEHEMENTLY ARGUES THAT IT IS CRYSTAL CLEAR THAT THE HON'BLE THIRD MEMBER OF THE CESTAT HAD PROCEEDED ONLY TO DECIDE WHETHER THE EVIDENCE OF HIGHER ELECTRICITY CONSUMPTION PROVES SUPPRESSION OF PRODUCTION . TH ER E IS NO JUSTIFICATION TO RELY ON THE DECISION IN THE CASE OF R.A . CASTINGS (SUPRA). HE ARGUES THAT THERE IS CONC LUSIVE EVIDENCE AGAINST THE ASSESSEE BY WAY OF ADMISSION AND THE PETITION FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION AND HENCE, THE SE EVIDENCES CANNOT BE DISCARDED. LD. SPL. AR FOR THE REVENUE FU RTHER SUBMITS THAT THE ASSESSEE IS BOUND TO MAINTAIN THE RECORD OF THE ELECTRICITY CONSUMPTION IN FORM NO. G - 7 AS ADMITTEDLY THE ASSESSEE COMES INTO THE HT CONSUMER. THE LD. SPL. AR FILED THE COPY OF THE CIRCULAR ISSUED BY THE MSEB BEING DEPARTMENTAL CIRC ULAR NO. 484 AND SUBMITS THAT IT IS BINDING ON THE ASSESSEE AND THE ASSESSEE HAS TO SUBMIT THE SAME TO THE MSEB AUTHORITY. LD. SPL. AR SUBMITS THAT THE ASSESSEE HAS NOT AT ALL MAINTAINED ELECTRICITY CONSUMPTION RECORD IN FORM NO. G - 7 AS THE ASSESSEE W AS NO T DESIRING TO COME CLEAN TO SHOW THE CORRECT ELECTRICITY CONSUMPTION. HE SUBMITS THAT THE ASSESSING OFFICER HAS TAKEN THE MAXIMUM LIMIT OF 1026 UNITS OF ELECTRICITY CONSUMPTION FOR PRODUCTION OF PER MT AND NOT THE LOWER LIMIT AND IT CANNOT BE SAID THAT TH E ASSESSING OFFICER WA S BIAS IN FRAMING THE ASSESSMENT. 1 2 . IN THE REJOINDER LD. AR FOR THE ASSESSEE SUBMITS THAT THERE IS NO SEARCH OR SURVEY ACTION AGAINST THE ASSESSEE FOR THE ASSESSMENT YEARS IN PRESENT APPEALS AND ONLY FOUNDATION OF MAKING THE HIGH P ITCH ASSESSMENT IS THE ORDER OF THE CCE, AURANGABAD WHICH H AS BEEN KNOCKED DOWN BY THE MAJORITY DECISION OF THE CESTAT, MUMBAI. HE SUBMITS THAT SO FAR AS THE PETITION FILED BEFORE THE SETTLEMENT COMMISSION OF THE CENTRAL EXCISE AND CUSTOM, MUMBAI BENCH , N OWHERE THERE IS ANY OBSERVATION OR FINDING THAT THE SAID DECLARATION WAS BASED ON 23 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA ELECTRICITY CONSUMPTION . LD.AR SUBMITS THAT THERE WAS INVESTIGATION AGAINST SOME BROKERS & SUB - BROKERS WHO WERE INDULGED IN TRADING OF TMT BARS AND ON THE BASIS OF THE SAID INVESTIGATION SHOW CAUSE NOTICE S W ERE ISSUED TO THE ASSESSEE AND MANY OTHER C OMPANIES IN JALNA. HE SUBMITS THAT THE ASSESSEE PREFERRED TO APPROACH THE SETTLEMENT COMMISSION TO BUY THE PEACE , SAVE THE TIME AND AVOID THE LITIGATION AS THE PROVISIONS OF CENT RAL EXCISE ACT ARE VERY HARSH. LD. AR REFERRED TO THE ORDER OF THE SETTLEMENT COMMISSION AND SUBMITS THAT IT IS A COMMON SUMMARY ORDER INCLUDING THE ASSESSEE AND OTHER COMPANIES AND PRODUCTION OF 288.50 MTS ADMITTED BEFORE THE SETTLEMENT COMMISSION W AS AL SO OFFERED FOR TAX IN THE INCOME - TAX PROCEEDINGS. LD. AR SUBMITS THAT LD. SPL. AR FOR THE REVENUE PLACED HIS HEAVY RELIANCE ON THE DISSENTING ORDER OF LD. TECHNICAL MEMBER OF THE CESTAT WHEN IT IS PRINCIPLE OF LAW THAT ONLY THE ORDER PASSED BY MAJORITY OP INION IS A ORDER OF THE COURT OR TRIBUNAL AND IS BINDING AND IN THE PRESENT CASE BY THE MAJORITY DECISION OF THE CESTAT , THE ORDER OF THE LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS KNOCKED DOWN. HE ARGUES THAT THE ENTIRE CASE OF THE DEP ARTMENT IS BASED ON THE SO CALLED TECHNICAL OPINION OF DR. BATRA WHO WAS THE PROFESSOR OF IIT, KANPUR BUT THE SAID REPORT WAS NEVER MADE AVAILABLE TO THE ASSESSEE COMPANY. HE ARGUES THAT THE TECHNICAL REPORT BY DR. BATRA LACK THE SANCTITY AS IT IS NOT CLE AR THAT UNDER WHAT CONDITION AND IN WHICH PLACE AND FACTORY THE STUDY WAS CONDUCTED. 1 2 .1 HE ARGUES THAT NOTHING IS THERE ON RECORD TO MAKE SOME ARGUMENT ON THE SO CALLED REPORT OF DR. BATRA AS THE ASSESSEE WAS NOT AWARE UNDER WHAT WEATHER CONDITIONS AN D QUALITY OF RAW MATERIAL WAS USED IN THE COURSE OF PREPARING THE ALLEGED TECHNICAL REPORT ON THE POWER CONSUMPTION IN THE FURNACES. HE ARGUES THAT ON THE BASIS OF SOME TECHNICAL OPINION NO TAX LIABILITY CAN BE FASTENED ON THE ASSESSEE AS THE OPINION CANN OT BE SUBSTITUTED FOR THE REALITY. HE SUBMITS THAT WHEN THE 24 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA CESTAT, MUMBAI BENCH, MUMBAI HAS GIVEN THE CATEGORICAL FINDING THAT THERE IS NO EVIDENCE AGAINST THE ASSESSEE TO HOLD THAT THE ASSESSEE WAS INDULGED INTO CLANDESTINE REMOVAL OF THE GOODS THEN HOW AGAIN THE AS SESSEE IS PUT INTO THE ACCUSED BOX? LD. AR SUBMITS THAT IT IS THE DUTY OF MSEB TO GIVE THE FORM NO. G - 7 TO THE ASSESSEE AND COLLECT THE SAME AT THE TIME OF TAKING THE METER READING BUT IT IS NOT DONE BY THE MSEB ALSO. LD. AR SUBMITS THAT DISC ARDING ALL WELL SETTLE D PRINCIPLES OF LAW THE DEPARTMENT IS HARD PRESSING TO RELY ON THE DECISION OF THE TECHNICAL MEMBER OF THE CESTAT WHEN IT HAS NO LEGAL STANDING AS BY MAJORITY OPINION THE ORDER OF THE LD. COMMISSIONER OF CUSTOM AND CENTRAL EXCISE, AUR ANGABAD HAS BEEN CANCELLED. HE PLEADED FOR DELETING THE ENTIRE ADDITION. 1 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES O F HIS ARGUMENT ON 05 - 11 - 2014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND D ECISIONS RELIED ON BY BOTH THE P ARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BILLETS. SO FAR AS A.Y. 2007 - 08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 31 - 12 - 2009. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT , IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICITY CONSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGH ER SI D E AS COMPARED TO THE QUA NTUM OF PRODUCTION DECLARED BY THE ASSESSEE . THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION O F THE INGOT/BILLETS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE OF THE CCE , AURANGABAD VIDE THEIR LETTER DATED 29 - 03 - 2010 AS WELL AS ADJUDICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND ALLEGED E VASION OF EXCISE DUTY, T HE ASSESSING OFFICER 25 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA INITIATED THE RE - ASSESSMENT PROCEEDINGS FOR A.Y. 2007 - 08 AGAINST THE ASSES SEE COMPANY U/S. 147 OF THE ACT. I N REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE T O THE ASSESSEE COMPANY U/S. 147 FOR A.Y. 2007 - 08 T HE ASSESSING OFFICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEIVED F ROM THE CENTRAL EXCISE OFFICE AT AURANGABAD . 1 4 . THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCT ED BY DGCE (INTELLIGENCE) AGAINST THE FEW BROKERS AND SUB - BROKERS WHO WERE INVOLVED IN THE TRADING INTO THE INGOT/BILLETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFORE THE CENTRAL EXCISE AND CUSTOM SETTLEME NT COMMISSION, MUMBAI BENCH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETTING IMMUNITY FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED SUPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFORMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATI ON ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE AND ITS GROUP COMPANIES BY THE INCOME - TAX DEPT. ON 17 - 03 - 2006 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION U/S. 132(1) THE ASSESSMENT S OF THE ASSESSEE HAVE BEEN FRAMED U/S. 153A R.W.S. 143(3) FOR THE A.YS. 2000 - 01 TO 2006 - 07. IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEI ZURE OPERATION NO INCRIMINATING EVIDENCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT F RAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER REFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT A ND CERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE 26 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA ASSESSMENT FRAMED BY THE ASSESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS. 2007 - 08 AND 2008 - 09 BEFORE US ARE IMMEDIATELY NEXT ASSESSMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUENCE OF SEA RCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 1 5 . IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EVEN FOR THE A.YS. 2007 - 08 AND 2008 - 09 , NO INDEPENDENT INVESTIGATION OR ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME TAX A UTHORIT IES . IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORIT IES AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI . THE INVESTIGATI ON WAS CARRIED OUT BY CENTRAL EXCISE AUTHORIT IES I.E. DGCEI, AGAINST FEW BROKERS /SUB - BROKERS AND THOSE BROKERS GAVE THE NAME S OF MANY COMPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TMT BARS. AS PER THE STATEMENT GIVEN BEFORE THE CENTRAL EXCIS E AUTHORITIES BY THOSE BROKERS AS WELL AS SUB - BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI ANIL D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED THAT THEY WERE INVOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIPS ONLY AND NO EXCISE DUTY WA S PAID AND THEY WERE INVOLVED IN PROVIDING FAKE TRADING BILLS AND CHALLANS WHICH ACCOMPANIED THE VEHICLES CARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THE Y USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB - BROKERS ALSO ADMITTED THAT THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND TH E Y USED TO GET THE COMMISSION OF RS.100/ - PER MT. THE ASSESSING OFFICER H AS DISCUSSED THE INF ORMATION GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA NOS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGAINST THE BROKERS AND SUB - BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE A S WELL AS THE OTHER MANUFACTURERS WHO WERE 27 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA INVOLVED IN CLEARING THE EXCISABLE GOODS WITHOUT PAYMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM. AS PER THE INVESTIGATION DONE BY TH E CENTRAL EXCISE AUTHORIT IES , THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUPPLIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF SHRI SURENDR A S. PEETY, MANAGING DIRECTOR OF THE ASSESSEE RECORDED ON 12 - 01 - 2007 , BY THE DGCEI WHO ALLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. INGOTS / BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAI D MATERIAL WAS TO EXTENT OF 275 MT S . THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORIT IES I.E. DGCEI AND APPROACHED THE SETTLE MENT COMMISSION AND PAID THE EXCISE DUTY TO THE EXTENT OF RS.7,79,313/ - FOR CLEARING THE GOODS WITHOUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENT RAL EXCISE AUTHORI TIES . THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,000/ - . 1 6 . THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUSSED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN THE ASSESSMENT ORDER. A T THIS STAGE WE ARE NOT CONCERNED WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOW ER, HAS GIVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES . AS OBSERVED BY THE ASSESSING OFFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING 28 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA TECHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN INDUCTION FURNACE IS BETWEEN 650 T O 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE USED. THE ASSESSING OFFICER ALSO REFERRED TO THE TECHNICAL REPORT OF THE IIT, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M.S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VARIE S FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT , THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSMENT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND C USTOM, AURANGABAD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONSIDERING THE ELECTRICITY CONSUMPTION DECLARED BY THE ASSESSEE AND THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE , AURANGABAD ARE VERY MUCH REASONA BLE, FAIR AND JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCOUNTED PRODUCTIO N OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 1 7 . THE ASSESSING OFFICER ALSO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME - TAX ACT BY GIVING THE REASON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUCTION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE A SSESSEE HAS SUPPRESSED THE PRODUCTION AND ACCORDINGLY, WORKED THE SUPPRESSED PRODUCTION OF THE A.Y. 2007 - 08 AS UNDER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007 - 08 20,751 18,892 39,20,37,546 2008 - 09 29,276 21,444 40,75,72,486 29 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 1 8 . IN THE A.Y. 2007 - 08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/ - WHICH WAS IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT IN THE ORDER DATED 31 - 12 - 2008 AND MADE THE NET ADDITION OF RS.30,76,35,042/ - . SO FAR AS A.Y. 2008 - 09 IS CONCERNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008 - 09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008 - 09, THE ASSESSING OFFIC ER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, BUT FINALLY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETER MINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION . IN THE COMPUTATION FOR THE A.Y. 2008 - 09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTIONING RS. ( - ) 1,91,62,000/ - AS PER THE ORDER U/S. 143(3 ) WHEN IN FACT THE SA ID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE A.Y. 2008 - 09. 1 9 . IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YEARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE PRODUCTION /SALES AS DETERMINE D THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD ON THE BASIS OF POWER CONSUMPTION . T HE COPY OF THE ADJUDICATION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVICE TAX , AURANGABAD DATED 28 - 08 - 2009 (IN SHORT REFERRED TO AS THE CCE ) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B - I. THE CCE, AURANGABAD HAS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICITY BILLS , IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (P RIMARY INPUT ). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VARIOUS RECORDS , THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE VALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIE S, COST OF MAINTENANCE ETC. THE LD. COMMISSIONER 30 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT), KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHNICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MIX OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE OF THE ASSESSEE AS PER THEIR ELECTRICITY BILLS , THE AVERAGE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS V ARIES FROM 1454 TO 1856 UNITS . 1 9 .1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KANPUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODUCTION OF M.S. INGOT/BILLETS O N THE BASIS OF CONSUMPTION OF 1026 UNITS (MAXIMUM LIMIT) OF ELECTRICITY FOR PER MT OF MS INGOTS PRODUCED, IT IS NOTICED THAT THERE IS A HUGE DIFFERENCE IN THE ACTUAL/NORMAL PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. THE LD. CCE ACCORDI NGLY, OBSERVED THAT THE ASSESSEE HAS WILLFULLY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED THEMSELVES IN THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO REFERRED TO NON - MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTI ON RECORD MORE PARTICULARLY IN FORM G - 7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER . HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY . I T APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMI NATION OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABAD . THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS OF THE TRIBUNAL. THE LD. COMMISSIONER ALSO RELIED ON 31 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA THE INVESTIGATION MADE BY THE DGCEI AND SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED THE EVASI ON AND PAID THE EXCISE DUTY AND OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DEMAND RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXTENT OF RS.33,07,22,069/ - . 1 9 .2 THE SAID ORDER OF THE LD. COMMIS SIONER WAS CHALLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEMBER S OF THE CESTAT , I.E. LD. VICE - PRESIDENT AND LD. TECHNICAL MEMBER AND THE MATTER WAS REFE RRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: 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. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRIVENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNALS DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STEEL (SUPRA) AND HANS CASTINGS PVT. LTD. (SUPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 1 9 .3 THE LD. THIRD MEMBER OF THE CESTAT CONCURR ED WITH THE FINDING OF THE HON'BLE VICE - PRESIDENT THAT THE ORDER PASSED BY LD. C OMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE AND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDENT CORRECTLY OPINED THAT THE JUDGMENT IN R .A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 32 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 20.1 THE COMMISSIONE R IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIFICATIONS FOR HIS CONSIDERATION - (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE - JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DE LHI (MR. VARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATED 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989 - 90 WAS FOR CONCAST STEEL MA KING [THUS NOT FOR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A CLIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER - CONSUMPTION, AND ANOTHER LETTER DATED 5. 4.2008 OF ELECTROTHERM AGREEING - ., WITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION AND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMPTION. 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSI DERED DIFFERENT ELECTRICITY CONSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOWING DIFFERENT REPORTS - (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; 33 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE - JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHN EY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CCE, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINED THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COMMISSIONER IN THE I NSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PER REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REPORT ED IN DR. BATRA'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY - (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4 - 5 YEARS, WHICH WAS ECO NOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALANCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DEPOSITED, (IV). CLAIM OF HIGH AUXILIARY LO AD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS SUCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND IN CONTROVERTIBLE EVIDENCES RELATING TO - 34 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREMISES, AND NON - ACCOUNT ING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDESTINE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOYED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDEST INE REMOVAL OF GOODS WITH REFERENCE TO ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUCH AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMME RCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR AND ITS DISPOSAL, 2 0 .5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE AP PEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVIDENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE, NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTANT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APPEALS ARE - A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACC OUNTS IN SOME CASES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 35 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FINDINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CHALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVELLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (SUPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT - THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT - '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW THAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BASIS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OU T EXPERIMENTS IN DIFFERENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOPTED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTUR E. THE IMPUGNED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF ALLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ONUS, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLANDESTINE CLEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY - 'FROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNAL IN RA CASTING (SUPRA). THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO 36 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA OTHER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY R EVENUE THAT FURNACES INSTALLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITION AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN THE ORDERS IMPUGNED IN THE APPEA LS. THE REVENUE SOUGHT TO RELY ON AN ORDER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LTD., V/S. CCE, HYDERABAD - II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE D EPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (SC), RELIED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNICAL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJUDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS DEFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBABI LITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS, I AM OF THE VIEW THAT IT CANNOT BE - .A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PERIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTION. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRI C ARC FURNACE AND NOT INDUCTION - FURNACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTRIC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPTION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECORD. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA) IS SQUARELY APPLICABLE. 37 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 23. REVENUE, ALSO REL IED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER TRADE TAX, U.P, - 2007 - TIOL - 14 - SC - CT, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOME TAX, 2014 - TIOL - 203 - HC - AHM - IT, AND AN UNREPORTED ORDER DTD. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NOR M, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000 - 01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001 - 02 AND 2002 - 03.THIS WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE . IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CASE ARE THAT FOR THE ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS, NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN TH E PRODUCTIVITY AS COMPARED TO THAT IN A.Y. 2004 - 05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK - IN - PROGRESS IN THE BOOKS OF ACCOUNTS. I AM THEREFORE OF THE OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER THAN CENTRAL EXC ISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDINGS RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI - BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONSIDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND SILK MILLS (SUPRA), AS ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS, 2012 (275) E. L.T. 232 (TRI. - DEL.) THE TRIBUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FI NDINGS OF THE HON'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CASE IN ALL THE APPEALS. 38 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 1 9 .4 THE COMMON ORDER WAS PA SSED BY THE CESTAT ON 30 - 07 - 2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEAL S FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDER IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKERS AND IN CONSEQUENCE THE SHOW CAUSE NOTICE S (SCN) WERE ISSUED TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY . H ENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BROKERS AND SUB - BROKERS REFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AURANGABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE ALLE GED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 2008 - 09 , THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FRO M THE CENTRAL EXCISE AUTHORIT IES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER , IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007 - 08. AS VARY BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT , IN OUR OPINION THE ASSESSMENT ORDER S PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION /SALES HAVE N O LEGAL LEGS TO STAND . 20 . NOW, LET US DEAL WITH THE ARGUMENT OF LD. SPL. AR FOR THE REVENUE . A CCORDING TO HIM EVEN THE MINORITY ORDER OF LD. TECHNICAL MEMBER OF THE CESTAT WHO HAS SUPPORTED THE ORDER OF LD. COMMISSIONER OF CENTRAL EXCISE (CCE) IS ALSO L EGAL ORDER. SEC. 35D OF THE CENTRAL E XCISE A CT, 1944 PROVIDES THAT T HE PROVISIONS OF SUB - SECTIONS (1), (2), (5) AND (6) OF SECTION 129C OF THE CUSTOMS ACT, 1962 (52 OF 1962), SHALL APPLY TO THE APPELLATE 39 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA TRIBUNAL IN THE DISCHARGE OF ITS FUNCTIONS UNDER SAI D ACT AS THEY APPLY TO IT IN THE DISCHARGE OF ITS FUNCTIONS UNDER THE CUSTOMS ACT, 1962. HENCE, THE PROCEDURE OF THE APPELLATE TRIBUNAL I.E. CESTAT IS REGULATED AS PROVIDED IN SEC. 129C OF THE CUSTOM ACT, 1962. THE RELEVANT PROVISION OF THE CUSTOM ACT , 196 2 READS AS UNDER: S EC. 129C . PROCEDURE OF APPELLATE TRIBUNAL. (1) THE POWERS AND FUNCTIONS OF THE APPELLATE TRIBUNAL MAY BE EXERCISED AND DISCHARGED BY BENCHES CONSTITUTED BY THE PRESIDENT FROM AMONGST THE MEMBERS THEREOF. (2) SUBJECT TO THE PROVISIO NS CONTAINED IN SUB - SECTION (4), A BENCH SHALL CONSIST OF ONE JUDICIAL MEMBER AND ONE TECHNICAL MEMBER. (3) OMITTED (4) THE PRESIDENT OR ANY OTHER MEMBER OF THE APPELLATE TRIBUNAL AUTHORIZED IN THIS BEHALF BY THE PRESIDENT MAY, SITTING SINGLY, DISPOSE O F ANY CASE WHICH HAS BEEN ALLOTTED TO THE BENCH OF WHICH HE IS A MEMBER WHERE - (A) THE VALUE OF THE GOODS CONFISCATED WITHOUT OPTION HAVING BEEN GIVEN TO THE OWNER OF THE GOODS TO PAY A FINE IN LIEU OF CONFISCATION UNDER SECTION 125; OR (B) IN ANY DISPUTED CASE, OTHER THAN A CASE WHERE THE DETERMINATION OF ANY QUESTION HAVING A RELATION TO THE RATE OF DUTY OF CUSTOMS OR TO THE VALUE OF GOODS FOR PURPOSES OF ASSESSMENT IS IN ISSUE OR IS ONE OF THE POINTS IN ISSUE, THE DIFFERENCE IN DUTY INVOLVED OR THE DUTY INVOLVED; OR (C) THE AMOUNT OF FINE OR PENALTY INVOLVED, DOES NOT EXCEED TEN LAKHS RUPEES. (5) IF THE MEMBERS OF A BENCH DIFFER IN OPINION ON ANY POINT, THE POINT SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY, IF THERE IS A MAJO RITY; BUT IF THE MEMBERS ARE EQUALLY DIVIDED, THEY SHALL STATE THE POINT OR POINTS ON WHICH THEY DIFFER AND MAKE A REFERENCE TO THE PRESIDENT WHO SHALL EITHER HEAR THE POINT OR POINTS HIMSELF OR REFER THE CASE FOR HEARING ON SUCH POINT OR POINTS BY ONE OR MORE OF THE OTHER MEMBERS OF THE APPELLATE TRIBUNAL AND SUCH POINT OR POINTS SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY OF THESE MEMBERS OF THE APPELLATE TRIBUNAL WHO HAVE HEARD THE CASE, INCLUDING THOSE WHO FIRST HEARD IT. (6) SUBJECT TO THE PROVISIONS OF THIS ACT, THE APPELLATE TRIBUNAL SHALL HAVE POWER TO REGULATE ITS OWN PROCEDURE AND THE PROCEDURE OF THE BENCHES THEREOF IN ALL MATTERS ARISING OUT OF THE EXERCISE OF ITS 40 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA POWERS OR OF THE DISCHARGE OF ITS FUNCTIONS, INCLUDING THE PLACES A T WHICH THE BENCHES SHALL HOLD THEIR SITTINGS. (7).. 20. 1 AS PER THE ABOVE PROVISION WHEN THERE IS A DIFFERENCE OF THE OPINION BETWEEN THE LD. MEMBERS OF THE CESTAT THEN THE MATTER IS REFERRED TO LD. THIRD MEMBER AND AFTER THE ISSUE OR POINT/S OF DIF FERENCE REFERRED TO LD. THIRD MEMBER HA S BEEN DECIDED THEN THE MAJORITY ORDER IS PASSED ON THE BASIS OF MAJORITY OPINION WHICH IS A LEGAL ORDER AND MINORITY ORDER IS NOT A LEGAL ORDER IN THE EYE OF LAW. IN THE CASE OF THE ASSESSEE COMPANY ENTIRE MATTER OF ALLEGED SUPPRESSION OF PRODUCTION WAS REFERRED TO THE LD. THIRD MEMBER OF THE CESTAT AND NOT ONLY ANY SPECIFIC POINT AND THIS POSITION IS CLEAR FROM THE QUESTIONS OR POINTS REFERRED TO LD. THIRD MEMBER. WE, THEREFORE, REJECT THE ARGUMENT OF THE LD. SPL. AR FOR THE REVENUE THAT WE HAVE TO ALSO CONSIDER THE MINORITY ORDER OF THE LD. TECHNICAL MEMBER OF THE CESTAT. THE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMENT COMMISSION , MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COM PANIES. I T IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BASIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB - BROKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESS EE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANGABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VIOL ATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE HAS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN 41 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEE DINGS. THE FINDINGS IN THIS CASE ARE BASED ONLY ON MATERIAL AND EVIDENCE THAT HAVE BEEN BROUGHT ON RECORD IN THE INSTANT CASE . 21 . THOUGH THE LD. SPL. AR HAS REFERRED TO AND RELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTI CULARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON - SEC. 17 , SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAIN S THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MADE BY THE REVENUE BUT T HE ENTIRE A SSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVER, AS OBSERVE D ABOVE THE ADJUDICATION ORDER PASSED BY T HE CCE, AURANGABAD HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE , FOUNDATION OF ASSESSMENT S FOR A. YRS. 2007 - 08 & 2008 - 09 DO NOT EXIST . THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILE S AN APPEAL CHALLENGING AN ORDER OF TH E LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GET S MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. H ENCE, WE DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISION S RELIED ON BY LD. SPL AR OF THE REV ENUE WHICH ARE IN CONTEXT OF ADMISSION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISION S ARE NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAINT AINING OF FORM G - 7 IN RESPECT OF THE ELEC TRICITY CONSUMPTION, THE SAID ISSUE WAS ALSO BEFORE THE CESTAT WHILE DECIDING T HE FATE OF ORDER OF THE LD. CCE , AURANGABAD . LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI IS NOT CORRECT. T HE CESTAT IS A HIGHER 42 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL E XCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER IS RIGHT OR WRONG . 2 2 . WE HAVE ALREADY MENTIONED HERE - IN - ABOVE THAT IN THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S. 132(1) OF THE INCOME - TAX ACT ON 17 - 03 - 2006 AND ACCORDINGLY THE ASSESSMENT ORDERS FOR THE A.YS. 2000 - 01 TO 2006 - 07 WERE FRAMED U/S. 153A R.W.S. 1 43(3) OF THE ACT. THE A SSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000 - 01 TO 2006 - 07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEALED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNITS AS CONSUMPTI ON PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MADE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OFFICER HA D SIMPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDINGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERV ATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED ON 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WELL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 2000 - 01 TO 2005 - 06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOMPANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO IN CRIMINATING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS 43 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL P LACED BEFORE THE AUTHORITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UNIT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR - WISE PRODUCTION VIS - A - VIS ELECTRICITY CONSUMPTION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUC TION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000 - 01 24331059 18,524.239 1313 2001 - 02 25528565 17,010.558 1501 2002 - 03 31404354 19,709.654 1593 2003 - 04 31623843 20,396.313 1550 2004 - 05 43123824 23,240.189 1856 2005 - 06 62650888 29,582.434 2118 2006 - 07 70440580 36,017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTRICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL DETAILS REGARDING ELECTRICITY VIS - A - VIS PRODUCTION WERE BEFORE THE DEPARTMENT. IF THE DEPARTMENT HAD ANY DOUBT S REGARDING THE SAME, IT COULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF THESE ASSESSMENT YEARS, THE ASSES SMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000 - 01 TO 2005 - 06 ARE NOT 44 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING THE COURSE OF SE ARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT - MATTERS WERE ALREADY ON RECORD. THE RETURNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING ON THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PROVISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVOKING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB - S. (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB - S. (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERING THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A METHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDUCED F ROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL THE YEARS UNDER CONSIDERATION, THE AO DEVISED A STAT ISTICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME FOR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SI MPLY TAKEN THE LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO - CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME. 45 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 36. THE CONSUMPTION OF THE ELECTRICITY F OR THE MANUFACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUALITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, POWER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID ME TAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONCLUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY HAS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF SEARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASST. YRS. 2000 - 01 TO 2005 - 06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF THE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. YR. 2006 - 07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE ASSESSEE COMPANY FROM THE ASST. YRS. 2000 - 01 TO 2005 - 06. THEREFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BE EN DELETED IN ASST. YRS. 2000 - 01 TO 2005 - 06 IN BOTH THE CASES. 2 3 . IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MIL D STEEL I NGO TS/ B ILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HON 'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE INCOME - TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APPEAL WAS DISMISSED VIDE COMMON J UDGMENT DATED 10 - 02 - 2014 , IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE CA TEGORICAL OBSERVATIONS OF THEIR L ORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH ARE AS UNDER: 46 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT THE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000 - 01 TO 2005 - 06 HAD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEE DINGS U/S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UNIT PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YEAR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. THE FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL R EFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT, WHICH COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S. 153A OF THE ACT. T HE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH H AVE TO BE TAKEN INTO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CON SUMPTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 2 4 . LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAID OBSERVATION S ARE MADE IN THE CONTE X T OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCE PT THE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN 47 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN T HE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT IN A.YS. 2007 - 08 AND 2008 - 09 , NO INVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH ARE IMMEDIA TE NEXT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDING S AND OBSERVATION OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTANT TO DECIDE THE PRESENT APPEALS MORE PA RTICULARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY . 2 5 . I N THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( S UPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRESSION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBUNAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE ORDER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED ON RECORD BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERI NG THE FACTUAL ASPECTS OF THE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGHER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTION QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDING THE OUTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION TO THE DETRIMENT OF JUSTICE. THE CUSTOMS, E XCISE & 48 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA SERVICE TAX APPELLATE TRIBUNAL FURTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF REVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN TO LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO PROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE REMOVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STAND. BOTH THE APPEALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL RELIEF, IF ANY.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION CO ULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY THE HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A - 108 (SC). THE BASIS FOR THE ADDITION IN THE PRESENT CASE WAS THE INVESTIGATION R EPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDITION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSES SEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (SUPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUG HT ON RECORD TO PROVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID FINDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT IN ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF, W E HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORE SAID ADDITION 49 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUNT. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 AND 2 RAISED BY THE REVENUE. 2 6 . IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPRA) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAG ING DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADD ITION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASSESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURAN GABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELE CTRICITY USED IN MANUFACTURING OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE ADDITIONS MADE TOWARDS THE ALLEGED SUPPRESSION OF PRODUCTION AND SALES AT ENTIRETY AND ALLOW THE GROUN D NOS. 3, 4, 5, 6 & 8 IN THE A.Y. 2007 - 08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2008 - 09. 2 7 . THE NEXT ISSUE IS THE REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOK S OF ACCOUNT WAS THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETERMINED ON THE BASIS OF THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/ BILLETS RELYING ON THE TECHNICAL OPINION OF DR. BATRA, IIT, KANPUR . N O OTHER REASONS ARE GIVEN BY THE ASSESSING OFFICER . W E HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. WE, THEREF ORE, HOLD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE 50 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA UPHELD . WE, ACCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007 - 08 AND GROUND NO. 5 IN THE A.Y. 2008 - 09. 2 8 . THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS PROFIT ESTIMATED BY T HE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES AND SAID ISSUE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007 - 08 AND GROUND NO. 7 IN THE A.Y. 2008 - 09 ARE ON . AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIONS MADE BY THE ASSESSING OFFICER ARE DELETED , THE GROUND NO. 9 IN THE A.Y. 2007 - 08 AND GROUND NO. 7 IN THE A.Y. 2008 - 09 BECOME INFRUCTUOUS. 2 9 . IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE OBJECTION FOR MAKING THE ADDITION OF RS.37,69,582/ - . THE SAID ADDITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN ELEMENT OF THE UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS AN AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE U NDISCLOSED SALE FOR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/ - AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.37,69,582/ - . IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS CONFIRMED THE AL LEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES , HENCE, THIS ADDITION DOES NOT SURVIVE AND SAI D ADDITION IS ALSO DELETED . WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 30 . NOW, WE TAKE UP THE REVENUES APPEAL FOR THE A.YS. 2007 - 08 AND 2008 - 09. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS WHICH ARE COMMON IN BOTH THE APPEALS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN 51 ITA NOS. 123, 124, 435 & 436/PN/2012, THE SRJ PEETY STEELS PVT. LTD., JALNA AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODUCTION SHO WN IN THE BOOKS OF ACCOUNTS? 3 1 . WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. A S THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITION S , THE GROUND S TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE ADDITION S ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 3 2 . IN RESULTS, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16 - 01 - 20 1 5 SD/ - SD/ - ( R . K . PAN DA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE , DATED : 16 TH JANUARY, 2015 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. BY ORDER // TRUE COPY// ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , PUNE
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