ACIT, Aurangabad V. M/S Mahaveer Steel Re-rolling Mills, Aurangabad

ITA 1448/PUN/2012

• Counselvise Citation: 144824514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Search and seizure; Retraction
• Section: 143(3); 153A; 260A; 145; 148; 12; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.1072 TO 1076/PN/2012 ASSESSMENT YEARS: 2004-05 TO 2008-09 MAHAVEER STEEL RE-ROLLING MILLS, PLOT NO.26/27, MIDC, CHIKALTHANA, AURANGABAD - 431210 . APPELLANT PAN: AAOFM8884F VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, AURANGABAD . RESPONDENT ITA NOS.1446 TO 1450/PN/2012 ASSESSMENT YEARS: 2004-05 TO 2008-09 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, AURANGABAD . APPELLANT VS. MAHAVEER STEEL RE-ROLLING MILLS, PLOT NO.26/27, MIDC, CHIKALTHANA, AURANGABAD - 431210 . RESPONDENT PAN: AAOFM8884F ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 26-02-2015 DATE OF PRONOUNCEMENT : 05-03-2015 ORDER PER SUSHMA CHOWLA, JM: ALL THE CROSS APPEALS FILED BY THE ASSESSEE AND REV ENUE ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A), AURANGABAD, DATED 30. 04.2012, RELATING TO ASSESSMENT YEARS 2004-05 TO 2008-09 AGAINST ORDERS PASSED UNDE R SECTION 143(3) R.W.S. 147 & 144A OF THE INCOME TAX ACT, 1961. 2. THIS BUNCH OF APPEALS RELATING TO THE SAME ASSES SEE ON SIMILAR ISSUE, WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO T HE FACTS AND ISSUES IN ITA NO.1072/PN/2012 AND ITA NO.1446/PN/2012 TO ADJUDICA TE THE ISSUES. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1072/PN/2012:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FA ILED TO APPRECIATE THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R IS BAD IN LAW AND THE SAME MAY PLEASE BE CANCELLED. 2. THE LEARNED CIT (A) HAS NOT APPRECIATED THAT THE N OTICE ISSUED BY THE LEARNED ASSESSING OFFICER U/S 148 OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND THE SAME MAY PLEASE BE QUASHED AND ENTIRE ASSES SMENT ORDER BASED ON THE SAID NOTICE MAY PLEASE BE QUASHED. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FA ILED TO APPRECIATE THAT, THE ASSESSING OFFICER ERRED IN REJECTING THE BOOKS OF ACCOUNTS U/S 145(1) OF THE INCOME TAX ACT, 1961 AND IT IS PRAYED THAT PROFIT A RRIVED FROM AUDITED BOOKS OF ACCOUNTS MAY PLEASE BE ACCEPTED. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ER RED IN CONFIRMING THE ADDITION ESTIMATING 4% GROSS PROFIT ON THE SUPPRESS ED SALES ESTIMATED BY THE A.O. WHICH IS NOT BASED ON THE FACTS AND HE HAS PUR ELY ESTIMATED THE SALES ON ASSUMPTION / PRESUMPTION BASIS. SUPPRESSED SALES AR E CALCULATED DECIDING QUANTUM OF PRODUCTION TAKING THE BASE OF ELECTRICIT Y CONSUMPTION. 5. CLANDESTINE REMOVAL OF FINISHED PRODUCT WAS ESTABL ISHED BY THE EXCISE DEPARTMENT IN THEIR SEARCH, NO INCREMENTING DOCUMEN T OR STOCK WAS FOUND TO THE EXCISE DEPARTMENT, ONLY ON THE BASIS OF ELECTRI CITY CONSUMPTION CLANDESTINE SALES ARE CALCULATED BY EXCISE DEPARTME NT AND AS SUCH THE ADDITION MADE BY THE A.O. IS NOT LEGALLY SUSTAINABL E. 6. ULTIMATELY IF THE ADDITION MADE BY THE A.O. ON SUP PRESSED SALES OF TMT BARS IS NOT LEGALLY SUSTAINABLE THEN THERE WILL BE NO CAUSE FOR ADDITION UNDER THE HEAD WORKING CAPITAL REQUIREMENT. 7. APPELLANT CRAVES TO ADD, ALTER, AMEND, DELETE THE GROUNDS OF APPEAL AND TO RAISE ADDITIONAL GROUNDS OF APPEAL OR TO WITHDRAW A NY GROUNDS OF APPEAL. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1446/PN/2012:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCT ION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CL ANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT T HAT MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTI ON WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODU CTION SHOWN IN THE BOOKS OF ACCOUNTS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN ALLOWING ASSESSEE'S APPEAL ESPECIALLY WHEN THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION OF HO N'BLE COURT IN THE CASE OF BHAGWATI ISPAT PVT. LTD. VS.CCA BHOPAL. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE WOR KING CAPITAL IS REQUIRED FOR PURCHASE OF RAW MATERIAL AND DAY TO DAY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 3 5. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CI T(A) BE VACATED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY GROUNDS OF APPEAL. 5. THE ISSUE RAISED IN THE CROSS APPEALS FILED BY T HE ASSESSEE AND THE REVENUE RELATING TO ASSESSMENT YEARS 2004-05 AND 2008-09 IS AGAINST THE ESTIMATION OF GROSS PROFIT ON SUPPRESSED SALES, WHICH IN TURN, WERE CAL CULATED BY ESTIMATING THE PRODUCTION ON THE BASIS OF ALLEGED ELECTRICITY CONS UMPTION. ANOTHER ISSUE RAISED BY THE ASSESSEE IS AGAINST THE RE-OPENING OF ASSESSMEN T UNDER SECTION 147/148 OF THE ACT. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN RELATED CASE OF ESTIMATION OF INCOME BA SED ON THE ALLEGED CONSUMPTION OF ELECTRICITY IN THE CASE OF M/S. SRJ PEETY STEELS PV T. LTD. VS. ADDL.CIT IN ITA NOS.123 & 124/PN/2012 AND THE APPEALS FILED BY THE REVENUE IN ACIT VS. M/S. SRJ PEETY STEELS PVT. LTD. IN ITA NOS.435 & 436/PN/2012 RELAT ING TO ASSESSMENT YEARS 2007-08 AND 2008-09, VIDE ORDER DATED 16.01.2015. THE LEAR NED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFF ICER ON THE BASIS OF INFORMATION RECEIVED FROM THE CENTRAL EXCISE & CUSTOMS AUTHORIT IES AND ON THE BASIS OF CONSUMPTION OF ELECTRICITY UNITS OBSERVED THAT AGAI NST 1026 UNITS CONSUMED, THERE WAS PRODUCTION OF ONE INGOT AND APPLYING THE SELLIN G PRICE FOR EACH YEAR, THE UNDISCLOSED SALES WERE COMPUTED AND THE SAME WERE A DDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN ADDITION THE ASSESSING OFFICER ALSO ADDED THE INITIAL CAPITAL REQUIRED IN EACH YEAR. THE CIT(A) ON THE OTHER HAN D, UPHELD THE WORKING OF EXCESS PRODUCTION AS CORRECT, BUT HE HELD THAT ONLY PROFIT ON THE UNDISCLOSED SALES WAS TO BE ADDED AS INCOME OF THE ASSESSEE. CONSEQUENTLY, 4% ON UNDISCLOSED TURNOVER WAS ADDED IN THE HANDS OF THE ASSESSEE. THE CIT(A) ALS O ALLOWED PARTIAL RELIEF OUT OF THE ADDITION MADE ON ACCOUNT OF WORKING CAPITAL IN THE FIRST YEAR OF BUSINESS. IN RESPECT OF THE SECOND ITEM MANUFACTURED BY THE ASSESSEE I.E . TMT BAR, THOUGH THERE WAS NO INFORMATION FROM THE CENTRAL EXCISE & CUSTOMS AUTHO RITIES, THE ASSESSING OFFICER ESTIMATED THAT 188 UNITS WERE UTILIZED FOR PRODUCTI ON OF 1 TMT BAR AND WORKED OUT THE UNDISCLOSED SALES AND ALSO MADE ADDITION ON ACCOUNT OF WORKING CAPITAL ADJUSTMENT. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 4 THE CIT(A) FURTHER HELD THAT SINCE INGOT WAS THE RA W MATERIAL FOR TMT, SO BENEFIT OF ADDITION ON ACCOUNT OF TMT IS TO BE ALLOWED TO THE ASSESSEE. 7. OUR ATTENTION WAS DRAWN TO THE ORDER OF CIT(A), WHEREIN AT PAGE 23, THE CIT(A) HAD TABULATED THE DETAILS AND HAD ALLOWED TH E BENEFIT OF SUPPRESSED PRODUCTION OF INGOT GIVEN AND WHERE THE PRODUCTION WAS EXTRA, THEN ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE VIDE GROUNDS OF APP EAL WAS THAT THE ASSESSEE HAD CHALLENGED THE REJECTION OF BOOKS OF ACCOUNT AND HA D ALSO CHALLENGED THE BASIS FOR ESTIMATION OF UNDISCLOSED PRODUCTION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN CASE, NO ADDITION IS T O BE MADE ON ACCOUNT OF UNDISCLOSED PRODUCTION OF INGOT TMT, THEN THERE WAS NO MERIT IN MAKING ANY ADDITION ON ACCOUNT OF WORKING CAPITAL ADJUSTMENT. 8. IN THE APPEAL FILED BY THE REVENUE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE REVENUE WAS AGGRIEV ED BY THE APPLICATION OF RATE OF 4% AND ALSO AGAINST THE DELETION OF WORKING CAPITAL ADJUSTMENT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED O N RECORD THE COPY OF ORDER OF CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (C ESTAT) AND POINTED OUT THAT THE ASSESSEE WAS ONE OF THE PARTY BEFORE THE CESTAT AND AS AGAINST M/S. SRJ PEETY STEELS PVT. LTD., THERE WAS NO SEPARATE ACCEPTANCE OF SUPPRESSED PRODUCTION IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE FURTHER STATED THAT GROUND OF APPEAL NO.1 WAS NOT P RESSED. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A) AND POINTED OUT THAT VIDE GROUN DS OF APPEAL NOS.1 AND 2, THE ISSUE WAS RAISED AGAINST THE ESTIMATION OF PROFITS IN THE HANDS OF THE ASSESSEE @ 4% AND VIDE GROUND OF APPEAL NO.3 AGAINST THE REJECTIO N OF BOOKS OF ACCOUNT AND RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE MA DHYA PRADESH HIGH COURT IN BHAGWATI ISPAT PVT. LTD. VS. CCA, BHOPAL. THE LEAR NED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER POINTED OUT THAT THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR PURCHASE OF RAW MATERIAL AND DAY-TO-DA Y PRODUCTION ACTIVITIES. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 5 10. IN REJOINDER, THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT THAT THE FACTS IN BHAGWATI ISPAT PVT. LTD. VS. CCA, BHOPAL (SUPRA) WERE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. OUR ATTENTION WAS FURTHER DRAWN TO THE ORDER OF CESTAT, IN WHICH, IN THE CASE OF ASSESSEE, THE THIR D MEMBER HAD STATED THAT NO ADDITION HAS TO BE MADE IN THE HANDS OF THE ASSESSE E. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE B USINESS OF MANUFACTURING OF M.S. INGOTS, RUNNER AND RIZERS, ANGLES, CTD BARS, C HANNELS, ETC. INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM THE OFFICE O F THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VIDE LETTER DATED 01 .04.2010 THAT ON THE BASIS OF INFORMATION OF RAW-MATERIAL PURCHASES, PRODUCTION, CLEARANCES, VALUE OF CLEARANCES, DUTY PAID, ELECTRICITY CONSUMPTION, THEY ESTABLISHE D THAT THE ASSESSEE HAD INDULGED IN THE SUPPRESSION OF PRODUCTION AND CLANDESTINE REMOV AL OF FINISHED PRODUCTS WITHOUT PAYMENT OF EXCISE DUTY DURING THE FINANCIAL YEARS 2 003-04, 2004-05, 2005-06, 2006- 07 AND 2007-08. IN VIEW OF THE SAID INFORMATION GI VEN BY THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT IN THE REPORT, IT WAS REPORTED T HAT THE HIGHEST POWER CONSUMPTION I.E. 1026 UNITS OF POWER, PER MT PRODUC TION WAS ADOPTED AS MAIN POWER CONSUMPTION, AS AGAINST AVERAGE CONSUMPTION SHOWN B Y THE ASSESSEE. FURTHER, THE FACT OF VARIATION IN CONSUMPTION OF ELECTRICITY, SP IKES IN ELECTRICITY CONSUMPTION VIS-- VIS PRODUCTION, INPUT, OUT RATIO, CONSUMPTION OF RA W MATERIAL WAS TAKEN INTO CONSIDERATION AND SHORTAGE IN REPORTING OF PRODUCTI ON AND DUTY PAYABLE THEREON, WAS WORKED OUT FROM YEAR TO YEAR AS TABULATED HEREUNDER :- FINANCIAL YEAR TOTAL ELECTRICITY UNITS CONSUMED PRODUCTION AS PER IIT STANDARD CONSIDERING 1026 ELC, UNITS PER MT ACTUAL PRODUCTION SHOWN BY THE ASSESSEE DIFFERENCE IN PRODUCTION TOTAL VALUE BASIC EXCISE DUTY 2003-04 16202636 15792.043 12413.739 3378.304 47252336 7436659 2004-05 16848715 16421.750 12364.848 4056.902 76691666 8879511 2005-06 15395088 15004.959 10452.532 4552.427 77555147 12408824 2006-07 13521477 13178.827 10842.233 2336.594 42086740 6733878 2007-08 13305357 12968.184 10184.323 2783.861 63210353 10113656 ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 6 12. IN VIEW OF THE EVIDENCE GATHERED AGAINST THE AS SESSEE, SHOW CAUSE-CUM- DEMAND NOTICE DATED 07.05.2008 FOR THE FINANCIAL YE ARS 2003-04 TO 2008-09 WAS SERVED UPON THE ASSESSEE, WHICH IN TURN, WAS CONTES TED BEFORE THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD. VIDE ORDER DATED 26.08.2009, THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGA BAD HELD THE ASSESSEE TO HAVE INDULGED IN SUPPRESSION OF PRODUCTION AND CLEA RANCE OF GOODS WITHOUT PAYMENT OF DUTY. THE ASSESSEE WAS FOUND TO HAVE WILLFULLY SUPPRESSED THE FACT FROM THE RAW- MATERIAL STAGE TO THE CLEARANCE OF GOODS AND IT WAS OBSERVED THAT THE ASSESSEE HAD MANIPULATED THE RECORDS. THEREFORE, THE ASSESSEE W AS FOUND TO BE LIABLE TO PAY DUTY AS DEMANDED ALONG WITH INTEREST AND WAS ALSO FOUND TO BE LIABLE TO LEVY OF PENALTY FOR ITS ACTS, OMISSIONS AND COMMISSIONS. 13. THE ASSESSING OFFICER ON THE BASIS OF THE SAID INFORMATION RECEIVED FROM THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT, AURANGABAD W AS OF THE VIEW THAT THE ASSESSEE HAD NOT DISCLOSED SUM OF RS.4.72 CRORES IN THE RETURN OF INCOME RELATING TO ASSESSMENT YEAR 2004-05 AND CONSEQUENTLY, REASONS W ERE RECORDED FOR RE-OPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND NOT ICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER AFTER ELABORATING UPON THE MODUS OPERANDI OF MANUFACTURING OF INGOTS / BILLETS BY TH E ASSESSEE AND AFTER TAKING NOTE OF THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE & CUSTOMS DEPARTMENT, AURANGABAD AND ALSO AFTER CONSIDERING THE EXPLANATI ON FILED BY THE ASSESSEE I.E. WITH REGARD TO THE UNIT CONSUMPTION OF ELECTRICITY / MT INGOTS, ISSUED FURTHER SHOW CAUSE NOTICE TO THE ASSESSEE, UNDER WHICH IT WAS ALLEGED THAT THE MINIMUM ELECTRICITY CONSUMPTION FOR PRODUCTION OF MS INGOTS / RUNNER RA ISERS COMES TO 1,106 UNITS PER M.T. AND MAXIMUM ELECTRICITY CONSUMPTION COMES TO 1 ,414 UNITS PER M.T. THUS, THERE IS A DEVIATION IN ELECTRICITY UNIT CONSUMPTIO N PER MT I.E. UPTO 308 UNITS WHICH IS UNREASONABLE, HENCE UNACCEPTABLE. IT WAS FURTHER OBSERVED THAT THEREFORE, PLEASE EXPLAIN AS TO WHY DURING THE YEAR UNDER CONSIDERATI ON ALSO PRODUCTION IN YOUR CASE SHOULD NOT BE ESTIMATED ON THE BASIS OF ELECTRICITY UNIT CONSUMPTION @1026 UNITS/MT AS ADOPTED BY THE CENTRAL EXCISE AND CUSTOMS AUTHOR ITIES IN THE CASES OF STEEL MILLS / RE-ROLLING MILLS, SITUATED AT JALNA. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 7 14. THE MAIN PLEA OF THE ASSESSEE BEFORE THE ASSESS ING OFFICER WAS THAT ALL THE ELECTRICITY CONSUMED HAD NOT BEEN USED IN PRODUCTIO N OF INGOTS AND ELABORATE SUBMISSIONS WERE MADE BY THE ASSESSEE, WHICH WERE R EJECTED BY THE ASSESSING OFFICER AND ALSO RELIANCE WAS PLACED ON THE RATIO L AID DOWN BY LAID DOWN BY THE HONBLE MADHYA PRADESH HIGH COURT IN BHAGWATI ISPAT PVT. LTD. VS. CCA, BHOPAL (SUPRA) AND ESTIMATION WAS MADE ON SUPPRESSION OF P RODUCTION IN THE HANDS OF THE ASSESSEE. AFTER REJECTING THE BOOKS OF ACCOUNT, FI RST ADDITION OF RS.2,09,11,754/- WAS MADE ON ACCOUNT OF THE SUPPRESSED PRODUCTION OF ING OTS AND FURTHER ADDITION OF RS.19,77,654/- WAS MADE ON ACCOUNT OF PRODUCTION OF CTD BARS. THE ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF WORKING CA PITAL REQUIRED FOR CARRYING OUT UN- RECORDED PRODUCTION AT RS.85,01,949/-. 15. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICE R IN REJECTING THE BOOKS OF ACCOUNT AND ALSO UPHELD THE ORDER OF ASSESSING OFFI CER IN WORKING OUT ESTIMATED INCOME AND ALSO UPHELD THE ORDER OF ASSESSING OFFIC ER IN HOLDING THAT THERE WAS SUPPRESSION OF PRODUCTION / SALES OF MS INGOTS / BI LLETS AND TMT BARS ON THE BASIS OF ELECTRICITY UNIT CONSUMPTION. HOWEVER, THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SALE CONSIDERATION AFTER REDUCING ONLY THE COST OF RAW MATERIAL REQUIRED FOR ALLEGED SUPPRESSED PRODUCTION SOLD, AS UNDISCLOSED INCOME AND APPLIED GROSS PROFIT RATE AT 4% TO COMPUTE THE PROFIT ON THE ALLEGED SUPPRESSED SALE OF TMT BARS AND MS INGOTS. THE CIT(A) FOR THE CAPTIONED ASSESSMENT YEARS COMPUTED THE ADDITION YEAR-WISE AS UNDER:- A.Y. PROFIT ON SUPPRESSED SALE OF TMT BARS RS. PROFIT ON SUPPRESSED SALE OF MS INGOTS RS. ADDITION ON ACCOUNT OF WORKING CAPITAL REQUIREMENT RS. TOTAL ADDITION CONFIRMED 2004-05 19,82,500 4,76,562 24,59,062 2005-06 25,17,406 5,92,677 -- 31,10,083 2006-07 29,58,155 4,49,978 -- 34,08,133 2007-08 38,58,404 -- -- 38,58,404 2008-09 43,48,665 -- -- 43,48,665 16. FURTHER, THE ASSESSING OFFICER HAD ALSO MADE AD DITION ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR SUPPRESSED PRODUCTION, HOWEVER , THE CIT(A) REDUCED THE ADDITION MADE BY THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN ASSESSMENT YEAR 2004-05. AS AGAINST ADDITI ON MADE BY THE ASSESSING ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 8 OFFICER OF RS.85,01,949/-, THE ADDITION TO THE EXTE NT OF RS.4,76,562/- WAS CONFIRMED AND THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 2005-06 TO 2008-09 WERE DELETED. 17. THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION MADE ON ACCOUNT OF PROFIT ARISING ON SUPPRESSED SALES ON THE ALLEGED CONSUMPT ION OF ELECTRICITY. THE ASSESSEE IS ALSO IN APPEAL AGAINST THE ADDITION MADE ON ACCO UNT OF WORKING CAPITAL REQUIRED FOR THE ALLEGED PRODUCTION. 18. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ESTIMATION OF PROFIT @ 4% TO WORK OUT THE ADDITION IN THE HANDS OF THE ASS ESSEE AS AGAINST THE TOTAL SUPPRESSED SALES BEING ADDED IN THE HANDS OF THE AS SESSEE BY THE ASSESSING OFFICER. THE NEXT ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR THE ALLEGED PRODUCTION. 19. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS GENERAL. 20. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSE E IN ALL THE CAPTIONED APPEALS IS AGAINST THE RE-OPENING OF ASSESSMENT UND ER SECTION 147 / 148 OF THE ACT, WHICH WAS NOT PRESSED BY THE ASSESSEE, HENCE, THE S AME IS DISMISSED AS NOT PRESSED. 21. THE SECOND ISSUE ARISING IN THE PRESENT APPEAL VIDE GROUNDS OF APPEAL NOS.3 TO 5 IS AGAINST THE ADDITION MADE ON ACCOUNT OF PRO FIT ARISING ON THE SUPPRESSED SALES WORKED OUT ON THE BASIS OF ELECTRICITY CONSUMPTION, AFTER REJECTION OF BOOKS OF ACCOUNT. 22. WE FIND THAT SIMILAR ISSUE OF ADDITION MADE IN THE HANDS OF ANOTHER CONCERN I.E. M/S. SRJ PEETY STEELS PVT. LTD. ON THE BASIS O F INVESTIGATION CARRIED OUT BY THE CENTRAL EXCISE AND CUSTOMS AUTHORITIES THAT THE PER SON WAS INVOLVED IN SUPPRESSION OF PRODUCTION ON THE BASIS OF ELECTRICITY CONSUMPTI ON AND REMOVAL OF GOODS WITHOUT PAYMENT OF LEGITIMATE EXCISE DUTY. THE TRIBUNAL HA D ELABORATELY CONSIDERED THE ALLEGATIONS OF THE CENTRAL EXCISE AND CUSTOMS AUTHO RITIES AND THE INVESTIGATION CARRIED OUT IN THE CASE OF THE ASSESSEE AND HAD ALS O CONSIDERED THE ORDER OF THIRD MEMBER OF CESTAT PASSED IN BUNCH OF CASES DATED 30. 07.2014 AND AFTER ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 9 CONSIDERING THE OBJECTIONS RAISED BY THE SPECIAL AR FOR THE REVENUE BEFORE THEM, HAD HELD THAT ORDERS OF ASSESSING OFFICER AND CIT(A ) BASED ON THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AUR ANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF ELECTRICITY IN THE MANUFACT URING OF INGOTS / BILLETS, WERE NOT SUSTAINABLE. THE ADDITION MADE TOWARDS ALLEGED SUP PRESSED PRODUCTION AND SALES WERE DELETED IN ENTIRETY AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE WERE ALLOWED. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSION OF THE P RODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND C USTOM, AURANGABAD ON THE BASIS OF POWER CONSUMPTION. THE COPY OF THE AD JUDICATION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AN D SERVICE TAX, AURANGABAD DATED 28-08-2009 (IN SHORT REFERRED TO A S THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 O F 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 (PRI MARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VARI OUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE VALUE, LE AVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARIES, COST O F MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (IIT), KANPUR AND HAS OBSERVED THAT AS P ER THE SAID TECHNICAL OPINION REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE METRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELEC TRICITY 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 ASSES SEE AS PER THEIR ELECTRICITY BILLS, THE AVERAGE CONSUMPTION OF ELECT RICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODUCTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 UNITS (MAXIMUM LIMIT) OF ELE CTRICITY 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 I N THE ASSESSEES RECORDS. THE LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFULLY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN T HEIR RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVO LVED THEMSELVES IN THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REF ERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MA TTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT C OMMISSION. THE LD. COMMISSIONER ALSO REFERRED TO NON-MAINTENANCE OF TH E PROPER ELECTRICITY CONSUMPTION RECORD MORE PARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 T O MARCH, 2008 IN HIS ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINATION 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 THE INVESTIGATION MADE BY THE DGCEI AND S HOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED THE EVASION AND PAID THE EX CISE DUTY AND OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMIS SIONER CONFIRMED THE DEMAND RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEV IED THE PENALTY TO THE EXTENT OF RS.33,07,22,069/-. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 10 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENT RAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEEN THE L D. MEMBERS OF THE CESTAT, I.E. LD. VICE-PRESIDENT AND LD. TECHNICAL M EMBER AND THE MATTER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTIN GS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APP EAL 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 A ND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDER PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD WAS NOT SUSTAINABLE A ND 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 PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARE LY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE E LECTRICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIF ICATIONS 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 PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOV ERNMENT 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 DELHI (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 CONCAS T STEEL MAKING [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 C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUM PTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM A GREEING-., WITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION A ND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF PO WER CONSUMPTION. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 11 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICITY CO NSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOW ING 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 C OMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (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 EXECUTIV E DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CC E, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THI S 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 COM MISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS AL LEGEDLY AS PER REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MO REOVER, THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REPORTED 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 WITH OUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKE RS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DE POSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS S UCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GO ODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTR OVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PRE MISES, AND NON-ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LA BOUR EMPLOYED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, R ECORDS OF ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 12 SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF G OODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUC H AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT C HECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECE IPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIG NOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVID ENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE , NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERM ITTED TO JUSTIFY THE DEMANDS .RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTANT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLAN ATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CAS ES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FIN DINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CH ALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVE LLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (S UPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO O N 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 T HAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BAS IS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BE EN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVE NUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFERENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE ADOP TED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVE NUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WH ATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THA T TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BA SIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGN ED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIF IED BOTH ON FACTS AND IN LAW. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 13 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF A LLEGED 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 C LEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY-'F ROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD TO BE ARBITRARY B Y HON'BLE TRIBUNAL IN RA CASTING (SUPRA). THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO O THER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEA RANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUE THAT FURNACE S INSTALLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITI ON AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN T HE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO RELY ON AN O RDER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LTD., V/S. C CE, HYDERABAD-II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSI DERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPA RTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF THE HON'BLE SU PREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (SC), REL IED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNIC AL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CAST ING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJ UDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS D EFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBAB ILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND A SSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTU RING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLAN TS, 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 REAS ON FOR LOWER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PE RIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTI ON. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTI ON UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. E LECTRIC ARC FURNACE IS HIGHER THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO SUCH REASON TO DISCARD THE REPORT AND I N ANY EVENT THE LETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSU MPTION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RE CORD. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CA STING (SURA) IS SQUARELY APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSI ONER 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 UNREPOR TED ORDER DTD. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VIS AKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHER S COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDI A (SUPRA), FOR THE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONS UMPTION 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 ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 14 WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CAS E ARE THAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS , NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PROD UCTIVITY AS COMPARED TO THAT IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN-PROGRESS IN TH E BOOKS OF ACCOUNTS. I AM THEREFORE OF THE OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDINGS RECORDED IN THE I MPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIE D FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI-BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTIO N WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONS IDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND S ILK 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 M AINLY ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON 'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. C ASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE IN STANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJORITY ORDE R IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HER E THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE D GCEI AGAINST SOME BROKERS AND IN CONSEQUENCE THE SHOW CAUSE NOTICES ( SCN) WERE ISSUED TO THE ASSESSEE AND OTHER COMPANIES AND THE ASSESSEE AND O THER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID T HE EXCISE DUTY. HENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BRO KERS AND SUB-BROKERS REFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE T HE LD. COMMISSIONER, AURANGABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE ALLEGED SUPPRES SION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I. E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREO VER, EVEN IF IN THE A.Y. 2008-09, THE ASSESSING OFFICER HAS OBSERVED THAT TH E INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS SEEN THAT ENTIRE O RDER 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 HA S BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION THE ASSESSM ENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT( A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SAL ES HAVE NO LEGAL LEGS TO STAND. 20. NOW, LET US DEAL WITH THE ARGUMENT OF LD. SPL. AR FOR THE REVENUE. ACCORDING TO HIM EVEN THE MINORITY ORDER OF LD. TEC HNICAL MEMBER OF THE CESTAT WHO HAS SUPPORTED THE ORDER OF LD. COMMISSIO NER OF CENTRAL EXCISE (CCE) IS ALSO LEGAL ORDER. SEC. 35D OF THE CENTRAL EXCISE ACT, 1944 PROVIDES THAT THE PROVISIONS OF SUB-SECTIONS (1), (2), (5) A ND (6) OF SECTION 129C OF THE CUSTOMS ACT, 1962 (52 OF 1962), SHALL APPLY TO THE APPELLATE TRIBUNAL IN THE DISCHARGE OF ITS FUNCTIONS UNDER SAID ACT AS THEY A PPLY TO IT IN THE DISCHARGE OF ITS FUNCTIONS UNDER THE CUSTOMS ACT, 1962. HENCE, T HE PROCEDURE OF THE APPELLATE TRIBUNAL I.E. CESTAT IS REGULATED AS PROV IDED IN SEC. 129C OF THE CUSTOM ACT, 1962. THE RELEVANT PROVISION OF THE CUS TOM ACT, 1962 READS AS UNDER: ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 15 SEC. 129C . PROCEDURE OF APPELLATE TRIBUNAL. (1) THE POWER S AND FUNCTIONS OF THE APPELLATE TRIBUNAL MAY BE EXERCISE D AND DISCHARGED BY BENCHES CONSTITUTED BY THE PRESIDENT FROM AMONGS T THE MEMBERS THEREOF. (2) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SEC TION (4), A BENCH SHALL CONSIST OF ONE JUDICIAL MEMBER AND ONE TECHNI CAL MEMBER. (3) OMITTED (4) THE PRESIDENT OR ANY OTHER MEMBER OF THE APPE LLATE TRIBUNAL AUTHORIZED IN THIS BEHALF BY THE PRESIDENT MAY, SIT TING SINGLY, DISPOSE OF ANY CASE WHICH HAS BEEN ALLOTTED TO THE BENCH OF WH ICH 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 LI EU OF CONFISCATION UNDER SECTION 125; OR (B) IN ANY DISPUTED CASE, OTHER THAN A CASE WHE RE THE DETERMINATION OF ANY QUESTION HAVING A RELATION TO THE RATE OF DU TY 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 INVOLVE D OR THE DUTY INVOLVED; OR (C) THE AMOUNT OF FINE OR PENALTY INVOLVED, DOE S NOT EXCEED TEN LAKHS RUPEES. (5) IF THE MEMBERS OF A BENCH DIFFER IN OPINION O N ANY POINT, THE POINT SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MA JORITY, IF THERE IS A MAJORITY; BUT IF THE MEMBERS ARE EQUALLY DIVIDED, T HEY SHALL STATE THE POINT OR POINTS ON WHICH THEY DIFFER AND MAKE A REF ERENCE 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, INC LUDING THOSE WHO FIRST HEARD IT. (6) SUBJECT TO THE PROVISIONS OF THIS ACT, THE AP PELLATE TRIBUNAL SHALL HAVE POWER TO REGULATE ITS OWN PROCEDURE AND THE PR OCEDURE OF THE BENCHES THEREOF IN ALL MATTERS ARISING OUT OF THE E XERCISE OF ITS POWERS OR OF THE DISCHARGE OF ITS FUNCTIONS, INCLUDING THE PLACES AT WHICH THE BENCHES SHALL HOLD THEIR SITTINGS. (7).. 20.1 AS PER THE ABOVE PROVISION WHEN THERE IS A DIF FERENCE OF THE OPINION BETWEEN THE LD. MEMBERS OF THE CESTAT THEN THE MATT ER IS REFERRED TO LD. THIRD MEMBER AND AFTER THE ISSUE OR POINT/S OF DIFF ERENCE REFERRED TO LD. THIRD MEMBER HAS BEEN DECIDED THEN THE MAJORITY ORDER IS PASSED ON THE BASIS OF MAJORITY OPINION WHICH IS A LEGAL ORDER AND MINORIT Y 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. T HIRD MEMBER OF THE CESTAT AND NOT ONLY ANY SPECIFIC POINT AND THIS POS ITION 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 C ESTAT. THE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE S ETTLEMENT COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISS ION 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 ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 16 ISSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTL ED. LD. CCE, AURANGABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATI ON SAID MATTER WHILE DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRO DUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO B E INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTL EMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDEN TICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. T HE 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 PLA CED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FIN DINGS 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 RE LIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MORE PARTICU LARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON-SEC. 17, SE C. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MADE BY TH E REVENUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMAT ION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATI ON ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVE R, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABA D HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE , FOUNDATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 2008-09 DO NOT EX IST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHAL LENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORI TY THEN THE ENTIRE ORDER GETS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER, INVESTIGATION BY DGCEI AND PRO CEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY T HE CCE, AURANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. HENCE, WE DO NO T CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF ADMISSION OF THE DIRECTOR OF THE ASSESSE E IN THE COURSE OF INVESTIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICITY CONSUMPTION, THE SAID ISSUE WAS ALSO BEFORE THE CESTAT WHILE DEC IDING THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED T O POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI IS NOT CO RRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UNDER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER IS RIGHT OR WRONG. 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT IN THE CASE OF THE ASSESSEE, THE SEARCH AND SEIZURE OPERATION WAS CARR IED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE AS SESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W. S. 143(3) OF THE ACT. THE ASSESSING 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 CONSU MPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASI S OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN O RDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEAL ED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNI TS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. TH E ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PROD UCTION AND MADE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSE SSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OFFICER HAD SIMPLY TAKEN TH E LOWEST ELECTRICITY ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 17 CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDI NGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF T HE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE CERTAIN IM PORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEE TY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WE LL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 20 00-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOM PANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINA TING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHO RITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BE EN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UN IT 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 ELECTRICIT Y CONSUMPTION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL D ETAILS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DE PARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME, IT CO ULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN TH E ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF TH ESE ASSESSMENT YEARS, THE ASSESSMENTS 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 CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE COURSE OF SEARCH. 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 BE EN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING O N THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PRO VISIONS OF S. 153A. ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (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 ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 18 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE TH E AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS O F THE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB-S. (1 ) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2), HAVE NOT BE EN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESS MENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERIN G THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM 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 YEA RS UNDER CONSIDERATION, THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME F OR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY 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 B Y THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE M ONTH 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. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUAL ITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, PO WER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMIC AL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST IN TO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATT EMPT TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONC LUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING I N SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY H AS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASS T. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF T HE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. Y R. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE AS SESSEE 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 BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CO NSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPE NDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE T HAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOU NTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTM ENT BEFORE THE HON'BLE ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 19 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 JUDGMENT DATED 10-02-2014 , IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH CO URT AND THERE ARE CATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRICITY WHICH A RE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT T HE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSI NESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, TH E RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 H AD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL RE QUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOU ND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROC EEDINGS U/S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELE CTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YE AR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT RE PORT ALSO CONTAINS THE UNIT PRODUCTION OF EACH YEAR, WHICH WA S ACCEPTED YEAR AFTER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAIS ED BY THE REVENUE. THE FINDING OF FACT DATED 31/03/2008 IN THE ORDER P ASSED BY THE INCOME TAX APPELLATE TRIBUNAL REFERS 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. THE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASSESSMENT YEARS. THE ADD ITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURIN G THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RE CORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRI BUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN IN TO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE A LLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS B EEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CON SEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT T HE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH EXCEPT FEW LO OSE SHEETS FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINS T 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 IMMEDIATE NEXT ASSESSMENT YEARS A FTER THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AND OBSERVATION OF THE TRIBUNAL AS W ELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTANT TO DECIDE THE PRESENT APPE ALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY. 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. (S UPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRES SION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON I NFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED B EFORE THE TRIBUNAL AND IT IS HELD AS UNDER: ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 20 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERV ICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELH I (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS, EXCISE & SERVICE TAX A PPELLATE TRIBUNAL IS PLACED ON RECORD BY THE LEARNED A.R. FOR THE ASS ESSEE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AF TER CONSIDERING THE FACTUAL ASPECTS OF THE CASE, THE QUANTUM OF PRO DUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS N OTHING ON RECORD TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDEN CE WAS MADE ON A PARTICULAR DATE AND THAT RESULTED IN HIGHER AMOUN T OF PRODUCTION. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SERVI CE TAX APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTIO N QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO S HOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDING THE OUTPU T IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLAT E TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION T O THE DETRIMENT OF JUSTICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLAT E 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 R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN T O LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO P ROVE 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 TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD 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 CO URT AS REPORTED IN 2011 (269) ELT A-108 (SC). THE BASIS FOR THE ADD ITION IN THE PRESENT CASE WAS THE INVESTIGATION REPORT OF THE CENTRAL EX CISE DEPARTMENT AND THE SUPPRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUSTOMS, EXCISE & SERVICE T AX APPELLATE TRIBUNAL (SUPRA) IN THE APPEAL FILED BY THE ASSESSE E AND ITS DIRECTOR HAS CATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE OUTPUT HAD BEEN CLEARED CL ANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOOD S. IN VIEW OF THE AFORESAID FINDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT I N ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTME NT IN PURCHASE OF RAW MATERIAL. IN VIEW THEREOF, WE HOLD THAT NO ADDI TION ON ACCOUNT OF PROFIT ON THE SALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HAN DS OF THE ASSESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVA TIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH TH AT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE S ALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUN T. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NO S.1 AND 2 RAISED BY THE REVENUE. ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 21 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRO DUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGI NG DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDE R OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HELD THAT THERE WAS NO JUSTIF ICATION TO SUPPORT THE SAID ADDITION AND THE REVENUES APPEAL WAS DISMISSED. I N THE LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITION S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASS ESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURIN G 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 GROUND 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. 23. THE SECOND ISSUE CONSIDERED BY THE TRIBUNAL WAS AGAINST THE REJECTION OF BOOKS OF ACCOUNT AND THE SAID GROUND OF APPEAL WAS ALSO ALLOWED BY THE TRIBUNAL HOLDING AS UNDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS THE ALLEGED S UPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETERMINED ON THE BA SIS 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. NO OTH ER REASONS ARE GIVEN BY THE ASSESSING OFFICER. WE HAVE ALREADY HELD THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED S UPPRESSION OF PRODUCTION/SALES. WE, THEREFORE, HOLD THAT THE REJ ECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE, ACCO RDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A .Y. 2008-09. 24. THE TRIBUNAL FURTHER HELD THAT THE ISSUE RAISED AGAINST THE PERCENTAGE OF THE GROSS PROFIT ESTIMATED ON THE ALLEGED SUPPRESSED SA LES APPLIED BY THE CIT(A) IS TO BE ALLOWED IN THE HANDS OF THE ASSESSEE AS THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. SIMULTANEOUSLY, THE GROUNDS O F APPEAL RAISED BY THE REVENUE AGAINST THE ESTIMATION OF GROSS PROFIT MADE BY THE CIT(A) WERE ALSO DISMISSED BY THE TRIBUNAL. THE RELEVANT FINDINGS OF THE TRIBUNAL AR E AS UNDER:- 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS PROFIT ESTIMATED BY THE 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 I N THE A.Y. 2008-09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROU NDS AS ENTIRE ADDITIONS MADE BY THE ASSESSING OFFICER ARE DELETED, THE GROU ND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. . 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT(A). WE HAV E ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE ON THE ALLEGED SUPPRE SSION OF THE PRODUCTION/SALES. AS THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 22 GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING TH E GROUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVEN UE IN BOTH APPEALS ARE DISMISSED. 25. THE TRIBUNAL ALSO DELETED THE ADDITION MADE ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR THE ALLEGED PRODUCTION VIDE PARA 29 OF THE ORDER, WHICH READS AS UNDER:- 29. 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 UND ISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMA TED AS AN AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARL IER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE F OR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVEST MENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.3 7,69,582/-. IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS C ONFIRMED THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSE SSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DEL ETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES , HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 26. IN VIEW OF THE ORDER OF THE TRIBUNAL IN THE CAS E OF M/S. SRJ PEETY STEELS PVT. LTD. VS. ADDL.CIT (SUPRA) IN THE CROSS APPEALS FILE D BY THE ASSESSEE AND THE REVENUE, WE HOLD THAT THERE IS NO MERIT IN THE ORDE R OF ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. CONSEQUENTLY, THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS ALLOWED. FUR THER FOLLOWING THE ORDER OF TRIBUNAL (SUPRA), WE ALSO DELETE THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT ARISING ON THE SUPPRESSED SALES WORKED OUT ON THE BASIS OF ALLEGED ELECTRICITY CONSUMPTION AND CONSEQUENTLY, THE GROUNDS OF APPEAL NOS.4 AND 5 RAISED BY THE ASSESSEE ARE ALSO ALLOWED. FURTHER, THE ADDITION MADE ON ACCOUN T OF WORKING CAPITAL REQUIREMENT IS ALSO DELETED IN VIEW OF THE ORDER PASSED BY THE TRI BUNAL (SUPRA). HENCE, THE GROUNDS OF APPEAL NOS.3 TO 6 RAISED BY THE ASSESSEE ARE THU S, ALLOWED. IN LINE THEREOF, THE GROUNDS OF APPEAL NOS.1 AND 2 RAISED BY THE REVENUE RESTRICTING THE ADDITION ONLY TO THE PROFIT ON SUPPRESSED PRODUCTION IS DISMISSED. HENCE, GROUNDS OF APPEAL NOS.1 TO 3 RAISED BY THE REVENUE ARE DISMISSED. THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS AGAINST THE DELETION OF WORKING CAPITAL REQUIREMENT IS ALSO DISMISSED IN VIEW OF THE ORDER OF TRIBUNAL IN THE CASE OF M/S. S RJ PEETY STEELS PVT. LTD. VS. ADDL.CIT (SUPRA). ITA NOS.1072 TO 1076/PN/2012 ITA NOS.1446 TO 1450/PN/2012 MAHAVEER STEEL RE-ROLLING MILLS 23 27. THE FACTS AND ISSUES IN ITA NOS.1073, 1074, 107 5 & 1076/PN/2012 AND ITA NOS.1447, 1448, 1449 AND 1450/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.1072/PN/2012 & 1446/PN/2012 AND OUR DECISION IN ITA NO.1072/PN/2012 & 1446/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.1073, 1074, 1075 & 1076/PN/2012 AND ITA NOS.1447, 1448, 1449 AND 1450/ PN/2012. 28. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS THE 5 TH DAY OF MARCH, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 5 TH MARCH, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE